Several “X” factors are changing the game in the office market.
Variables such as the low cost of capital, movement to open floor plans, implementation of technology in the workforce, and the desire for businesses to avoid long commutes have shaped the landscape of the office market.
Low Interest Rate Environment
The cost of capital has been relatively low and as a result a number of large office tenants have purchased, or are considering the option to purchase their own office facilities rather than continuing to pay rent to a third party landlord. For companies that have the access to financing or capital, the strategy of purchasing allows them to fix their occupancy costs and allow firms to build equity in real estate.
Desire for Efficient Office Space
“Collaborative” office space is becoming popular among designers and technology firms. The modern space plan of an office space allows for the reduction of cubicles and private offices. The increase in space efficiency decreases the demand in the marketplace for larger office footprints.
Adoption of Mobile Technology
The influx of millennials in the workforce has dramatically changed the way business is being done. Their need for a strong work and life balance has led to people telecommuting, holding meetings online, and working off of the virtual cloud, rather than being tied to their workstation in the office. This allows firms that our leasing space to implement shared workstations or have “hotel” desks where people that are coming into the office for a short period of time can work briefly and then be back on the road.
Keeping Out of Traffic
The commute into Honolulu from suburban neighborhoods during rush hour traffic can average ninety minutes one-way. As a result of the workforce’s efforts to avoid the commute they are opening offices within close proximity to their residences. The suburban markets are seeing an increase in market rents as a result of the increased demand and limited supply within the areas.