Obsolescence Equals Opportunity_final (002)

In assessing the risk of functional or competitive obsolescence in the office sector, we need to understand contemporary U.S. office workforce requirements. Drawing from a detailed analysis of prevailing office density shifts and employment growth forecasts, Cushman & Wakefield estimates that U.S. office space demand will measure at 4.6 bsf by the end of the decade, just slightly above current levels. This assumes a projected 6% growth in office-using employment by the end of the decade. 3 Overlaying current inventory, projected deliveries and a natural rate of vacancy of 13%, the U.S. market is on track to have 1.1 bsf of vacant office space by the end of the decade , 55% more than prior to the pandemic (Q4 2019). Of this 1.1 bsf of vacant space, 740 msf is considered “normal or natural vacancy” given that a certain percentage of office stock is always vacant to accommodate future growth. Therefore, netting out natural vacancy space from the 1.1 bsf of excess space, 330 msf of excess space will be attributable to the increase in hybrid and remote work strategies.

3 The 6% growth from today to Q4 2030 reflects an additional 2.1 million office-using jobs (from 34.6 to 36.7 million).

The Next Evolution of Office and How Repositioning and Repurposing Will Shape the Future | 7