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NAIOP: Solid Office Demand in 2017 as Optimism Intensifies

A new forecast released by the NAIOP Research Foundation calls for approximately 39.7 million square feet of net absorption of office space in 2017. That is about 10 million square feet per quarter — similar to the 41.4 million square feet actually absorbed in 2016.

NAIOP Office Space Demand Forecast, Second Quarter 2017 report highlights:

• The fourth quarter of 2016 produced significantly higher net absorption than had been forecast (14.8 million square feet compared to 7.8 million square feet), driven by greater-than-expected hiring in the office-using sectors of the economy.
• If growth in office-using employment continues at such a pace, the need for office space will expand rapidly and thus cause actual absorption to come in near or above the high limit of the forecast.
• Many uncertainties remain, including potential tax reform, health care reform, and even fundamental changes in federal budgeting. If the Trump administration can strike deals on some or all of these fronts in ways that are favorable to business, the economy may experience a significant increase in the rate of overall growth, increasing annual GDP growth to between 2.5 percent and 3.5 percent.

“The U.S. office market experienced a healthy Q1 2017, and the office sector is well-positioned for expansion as we continue to see robust growth,” said Thomas J. Bisacquino, president and CEO of NAIOP, the Commercial Real Estate Development Association. “However, the binding constraint to robust net absorption may end up being available space, as more and more markets are short on vacant, high-quality office space for tenants with immediate needs.”

Download the report: naiop.org/officedemand

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