Future of Office Construction?
Office building construction has been a mainstay of urban and suburban development for decades. But will it always be, at least in decent economic times? To some extent it likely will in the Seattle area, with our always-growing population and our success in key industries. But even here, the volume will probably slow down compared to recent decades. In metros that aren’t growing, I suspect that office development will slow to the level needed to replace whatever is lost, or even start to shrink a little.
The drivers of heavy past growth have played out — particularly the conversion to a white collar economy, and massive employment growth as women entered the workforce. Today, plenty of drivers point in the other direction, or might soon.
It used to be that most white collar jobs didn’t offshore easily. Many now do, or soon will. This trend isn’t a steady line and each industry’s experience is unique, often resulting in fits and starts, but the general direction seems clear. Our economy might get noticeably less white collar in the coming years.
Telecommuting is starting to live up to its potential. Even while most of us crave human contact, the basic telecommuting tools are finally getting easy. Broadband on the computer and phone. Teleconferencing with a simple webcam. Home access to networks rather than just email. If commuting is a challenge too, or expensive as oil prices rise….the planets are starting to align for more telecommuting.
Office square footage per person seems to be shrinking. Some of this is a reaction to cost, both in a great economy when space is expensive, and in a bad economy when tenants have less money. Some of it is cultural, as companies choose communalism over personal space. But it’s also structural — things that have always required a lot of space are requiring less and less, from filing cabinets we no longer need because of digital documents, to flat-screen monitors that allow shallower desks, to cell phones that allow people to step away for private conversations rather than relying on walls.
Some companies are going as far as not having assigned desks at all, which is related to the telecommuting trend and the digital trend. Maybe each person has a rolling cart with his or her personal stuff, plus a laptop on Wi-Fi. Maybe the office has 50 staff but only 20 or 30 desks, where people camp as-needed.
I don’t expect age demographics to have a big effect, at least not directly. Some suggest that as baby boomers reach retirement, they’ll take white collar jobs with them, particularly fewer new people will be entering the workforce (boomers’ kids are entering the workforce now, but after them comes another baby bust). But I suspect that the number of white collar jobs will be tied to demand for the services they provide, not the availability of the same people to provide those services. The main age-related demographic effect should be cultural, as younger people adapt better to freeform offices, and might be more open to telecommuting from the coffee shop.
Even as some trends become clear, there are too many questions to be sure about the bottom line. As some office jobs go away, will others take their place? If not, what other jobs will? Will wages in other countries rise relative to ours, which might help keep jobs from offshoring? What will the dollar do? Will people really telecommute effectively, in large numbers? Will anyone retire anytime soon?
If you’re looking for a positive on the commercial development side, here’s a big one: There might be a lot more housing construction in business districts. These will pencil more often because, for one, they won’t have to compete as much with office developments. The same traffic and oil price issues that may reduce commuting will encourage proximity for many people, even as some telecommuters head for the hills. Living in a mixed-use district seems poised to keep growing as a lifestyle choice, as each wave of added residents makes a district more attractive for the next wave. Heck, if you believe that the US will lose some of its economic primacy, maybe places like Seattle will end up being second home destinations for people from overseas, like Vancouver.
Unrelated aside: The City should go easy on the Macy’s skybridge. The store is important to Downtown, and we should support it rather than penalizing it. I agree that Seattle shouldn’t have a skybridge network, but they’re ok in special circumstances, particularly when they already exist.
