Global Office Spaces Are Shrinking
Office spaces are shrinking globally as the volume of deals with smaller floor plates, in terms of leasable area, is increasing, a sign of stress in the office sector in the US and Europe that has spilled over into India as well. MSCI Research, said that the global deal volume for offices has declined to the lowest level since the 2008 global financial crisis. A significant trend that has accelerated since the onset of the pandemic is the lean towards buildings with smaller floor plates. Evolving demand for offices can also be seen in the higher proportion of deal volume attributed to assets with smaller floor plates, or the leasable area per floor of a building. In the US, nearly a third of all deals in 2023 so far are in the 10,000-20,000 square feet floor plate while the share of deals for over 50,000 square feet floor plate is just under 10 per cent, according to MSCI Research. This is a trend that was seen after the financial crisis and further aggravated in the pandemic. Across the UK and Europe’s 20 largest metropolitan office markets, the percentage of office transactions with floor plates smaller than 10,000 square feet increased to 56 per cent in 2023 from 43 per cent in 2019. According to the MSCI US Quarterly Property Index for Q2 2023, the office sector has been the worst-performing segment for eight consecutive quarters while the index’s office vacancy rate rose to a new high of 16.2 per cent.
Tags : Office spaces shrinking globally smaller floor plates leasable area office sector US Europe MSCI US . Property Index MSCI Research