Will technology that increasingly allows workers to do more of their work off-site make physical office space obsolete? Not according to the latest research from Avison Young.
In its mid-year look at the office market in North American and Europe, Avison Young researchers write that despite the fact that the world is transitioning into a more automated and digital economy, physical office space remains important, and will remain so in the far future.
Mark Rose, chairman and chief executive officer of Avison Young, in a statement said that changes in technology have given rise to the idea that physical real estate is becoming obsolete. But Rose says that when looking at history, technology advancements have been just as likely to create new jobs as they have been to eliminate old ones.
As evidence, Rose cites Amazon and WeWork, a company that provides shared workspaces. Both of these companies are named frequently in the largest lease transactions in Avison Young’s mid-year reports.
“Amazon’s success in the digital realm is translating into increasing demand for physical space, not only in the retail arena, but also the industrial and, now, office sectors, pointing to a new driver of demand in the office market as the e-commerce industry continues to grow,” Rose said in a statement.
Rose said that the growth of WeWork and other providers of co-working and space-sharing services highlights the truth that business will still require physical worklaces.
This holds true, Rose said, even as “we move toward an interconnected world offering anywhere-anytime access to skills on demand.”
The numbers from Avison Young’s report do tell the story of a North American office sector that is not shrinking. Of the 64 office markets tracked by Avison Young in North America and Europe, market-wide vacancy rates fell in 40. Nearly 52 million square feet of office space was absorbed on an annualized basis.