Tuesday, May 08, 2007

Big Offices?

At the Industry Trends Committee Meeting at NAIOP last week, I suggested that with rapidly rising construction costs (we’ve seen a 47% increase in the past five years) combined with the falling costs of telecommunications, computer technology and video conferencing it might make more sense for companies to look at the rapidly expanding growth of homesourcing. Jet Blue is the most famous company to use homesourcing, doing all of their reservations from homes in Utah.

I probably shouldn’t have been surprised that a group of office builders might not like the thought that their big office buildings might become technologically obsolete. They didn’t laugh me out of the room, but no one thought this was something we should look into further.

This week’s Business Week magazine has an article “Rolling Out the Instant Office: Why maintain empty cubicles? Companies are gaining flexibility with on-demand office space.” Several items in the article caught my attention.

“About 60% of the office space that companies pay so dearly for is now a dead zone of darkened doorways and wasting cubes. Imagine if a factory had a utilization rate of only 40%.”

“Mark Golan (VP of real estate for Cisco Systems Inc.) says technology is enabling companies to move more and more of their real estate portfolios anywhere. Not to mention that office outsourcers usually deliver superior services in backwaters. It’s hard to justify rolling out the works for five workers in the middle of nowhere.”

In my travels around the USA, I am increasingly meeting people who are living a more tranquil life in rural America, while maintaining their existing work via telecommunications and video technology. I think that we will see this trend continue to grow as babyboomers either take early retirement or move to locations that they want to live in for quality of life issues.

Will office buildings in central cities continue to be the preferred location for employment growth or will office jobs become more dispersed throughout the country? What do you think?

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