“It’s pretty impressive.”—Ethan Harris, co-head of global economics research, Bank of America Corp., on recent U.S. Department of Labor figures
We agree, Ethan! Late 2014’s news of widespread hiring surges—the biggest hike in nearly three years (and a jump in wages along with it!)—was music to the ears of many. An impressive 321,000 jobs were added in November, following an increase of 243,000 the month before. Unemployment rates decreased in the leisure and hospitality, professional and business services, retail and manufacturing sectors, year-over-year. The American Institute of Architects reported an increase in employment. Interest rates remain low and there’s capital available for those who qualify for loans. Market indicators highlighted a solid 2014 and pointed to an economy that is poised to perform well in 2015.
While I tend to be on the cautiously optimistic side, some recent client interactions I’ve had give credence to these numbers and statistics. Sitting on the side of the meeting table where site selection and office size decisions are being made, you can feel the rosier outlook. For those of us in the commercial real estate business, these reports mean one thing: It’s going to be a busy year ahead.
Companies are snapping up desirable office spaces more quickly than they have had to before. The change has been pronounced, particularly in the past three months. A technology company with booming sales and a desire to expand in New York needed to immediately hone in on a space they wanted to lease for six months from now. This likely would not have been the case this time last year … or the year before that. Ordinarily, there would be a window of nine months to a year or more to seek out a space and plan a move-in; that’s now been reduced to no more than eight or nine months. That timeframe has been constricted due to demand, most likely based on the economic growth mentioned above. In order to have enough time to properly coordinate a lease, develop a design with the architect and build it out, particularly for quality spaces that are 30,000 square feet or more in size or in highly coveted locations, a faster plan of action is prudent. If a tenant sees something that works for their needs, our advice (after doing your due diligence, of course) is to lock it in!
One look at the Manhattan streetscapes and skyline—surely you’ve seen all of the cranes, storefront bridges and protection zones around lobbies to the north, south, west and east of you—tells you that this is not only a tenant’s concern. Landlords and building ownership are also feeling the need to move at an equally rapid pace. They are upgrading and modernizing their facilities to attract new tenants and retain existing ones, reinvesting in what they foresee will be valuable real estate now, in 2015, and beyond.
With no indications of a slowdown anytime soon, all I can say is… I’m happy to welcome 2015!
Scott E. Spector, AIA, is a principal at Spector Group, one of New York’s premier architecture and interior design firms and a leader in corporate tenant and building owner-based design. The award-winning company has affiliate offices nationally and internationally. To date, it has completed more than 2,000 projects.