Eric Bowles, director of global research at CoreNet Global says, "We've seen the average amount of space per worker drop over the past few years ... from an average of 250 SQFT/Worker to 175 SQFT/Worker."  That is a huge reduction with important ramifications.  The quote appeared in the November issue of National Real Estate Investor in an article titled, Trouble Ahead for the Office Market? Whether there is or not is something that I'll address in an upcoming post, although what really caught my attention was that quote.

It means that office buildings will require a 43% increase in occupancy in order to maintain the same leased percentage levels. The same article mentions that absorption in Qtr 3 2006 has reached the lowest level in the past two years. That's not going to help reach the pro-forma projections that the mad rush of institutional buyers used to justify their 5 and 6 cap purchases over the last few years.

This means that a 100,000 SQFT building that used to house 400 people now needs to accommodate 571 occupants. That will be a big problem for landlords required to park 100% of vehicles on site with less than a 5.7/1000 parking ratio. Typical in most suburban office parks is 4/1000, although there is a trend in the last few years by some insightful developers to design somewhat higher availability.

In any event, this would indicate a slowdown of demand in real SQFT terms that probably will continue to occur over the next decade as leases roll over. This is favorable news for corporate office tenants as it will suppress rents. It is also good news for landlords with properties with higher parking ratios or in downtown areas with available public parking as tenants will be forced to these properties in order to affect their new and more efficient design. Office users will be forced to this new tighter standard as their competitors reduce facility costs. Less is more.