The Local Office Market's Big Squeeze, Twin Cities Business, December 23, 2013

OK, truth in advertising:  This article is about Minnesota's Twin Cities, not Fairfax County, VA.  Yet, their circumstances and trends appear almost perfectly aligned.

Yet, Fairfax County's Department of Planning & Zoning (DPZ) fails to recognize the trend, sticking with a gross square footage (GSF) planning size for office employment at 300 GSF.  This article highlights that rentable square footage (RSF)--a discounted measure of office space--has shrunk from 225-250 RSF (about 250-275 GSF) in Minneapolis to about 170 RSF (or 190 GSF).  From a planning perspective, using a vastly overstated value for office space per employee means that new urban development in Fairfax County--including Reston--can reasonably expect half-again to twice as many office employees, market conditions permitting, swamping planning assumptions for traffic impact analysis and assuring absolute gridlock. 

Here is how this office shrinkage trend is playing out in the Twin Cities:

Twin Cities business boosters like to tout the exceptional features of the local economy. A lower-than-average unemployment rate. A strong base of local Fortune 500 companies. One of the lowest apartment vacancy rates in the United States. Consistently strong rankings on lifestyle ratings and surveys.

But when it comes to the health of the local office market, the Minneapolis-St. Paul area does not have much to brag about compared to other cities. New York-based Reis Inc., a real estate research firm, reported an office vacancy rate of 17.3 percent in the Twin Cities at the end of the third quarter of 2013, slightly higher than the national average office vacancy rate of 16.9 percent.

The Twin Cities market mirrors many other cities nationally that are seeing continued high office vacancy amid sluggish job growth and a trend for companies to use office space more efficiently. . . .

It would be easy to substitute "Fairfax County" for "Twin Cities" in this account.  At mid-2013, Fairfax County office vacancy rates were running at 16.9%--right at the national average reported in this article--according to the official Fairfax County real estate report.  For the full article, which talks about "densification" and different office cultures, please click here.