Economic Indicators Trending Positive

The latest figures from the Labor Department revealed 200,000 jobs were added to the economy in December, causing the unemployment rate to drop to 8.5 percent from 8.7 percent.  Good news for the economy.  So far, year-end data is pointing to growth – from stronger manufacturing figures to rising consumer confidence.

Another indicator moving in the right direction is the national office vacancy rate.  During the last quarter of 2011 the overall office vacancy rate dropped to 17.3 percent from 17.6 percent a year earlier, according to New York-based property research firm, Reis Inc.

Technology companies contributed to the improving numbers in the office market by adding headcount.  This growth helped offset contractions in the government and financial services sectors.  Business capitals like New York and Washington, D. C. had the lowest vacancy rates in the fourth quarter and were well below the national average.

Despite the encouraging news, the office sector still needs years of economic prosperity to help restore pre-recession vacancy figures.  “The U.S. office market is rebounding from a loss in occupied space of 137 million square feet – more than the inventory of office building in Boston – from 2008 to 2010,” said Victor Canalog, head of research and economics and Reis.

The reality is landlords have lost some tenants forever.  A growing number of companies have altered their workplace strategies and are committing less to traditional office space.  Telecommuting, office sharing and third party workplace providers are now viable alternatives to conventional office space.  It will be interesting to see how landlords respond.