The access to decision makers, strong networking, stellar educational opportunities and enhanced visibility for our bank, makes NAIOP the top organization for our needs.

- Tim Himstreet
  Pacific Premier Bank



President's Circle


Brokers Circle


Platinum Partners

NAIOP speaker: Demand for office space keeps shrinking

NAIOP speaker: Demand for office space keeps shrinking


By Thor Kamban Biberman

Wednesday, November 29, 2017


The demand for office space will continue to dwindle and innovation will stay ahead of regulation, according to an executive with the real estate consulting firm CEL & Associates.


Christopher Lee, the president and CEO of CEL & Associates, said while everybody won't be working from home, commercial real estate demands will decrease because less space is needed and it is possible to work from almost anywhere.


The number of people working from home in the U.S. has risen from 9 percent in the 1990s to 37 percent today, according to Lee, who was speaking at an NAIOP San Diego breakfast at the Marriott Del Mar Tuesday.


While fewer people are going into work, the space required for those in the office has shrunk.


"Baby boomers need 350 square feet; millennials need 150 square feet; and Generation Z [members] need 100 square feet or less," Lee said.


"If you have virtual office buildings, what is the need for space?" he added, saying a robot may soon do functions now reserved for administrative staff.


The consulting executive also envisioned that entire high rises could be managed remotely.


Lee predicted that 40 percent of all jobs will be automated by 2030, resulting in substantial retraining from trade schools while universities and colleges shrink.


Real estate will not escape the downsizing.


Lee predicted there will be 25 to 35 percent fewer real estate firms of all types in 2025 than there are today, and Google will become the world's largest real estate data company.


Goods must always be transported, but rather than relying on shipping containers, Lee said Amazon is envisioning a world where unmanned aircraft act as flying warehouses to deliver goods.


As for commercial real estate, Lee said the industry is moving away from being a regional business into a national and global one.


"The broker is actually a consultant in this new world," he said. "They are concentrating on collecting predictive analytics."


Commercial real estate is being influenced by 30 factors, according to Lee.


"This is not just a transition; this is happening in a transformative way," he said.


Lee also said he expects to see commercial real estate will be leased in the oceans and in space.


Back on earth, Lee identified $255 billion in closed-end and private real estate fund capital that had yet to be deployed, indicating investors are waiting for the right moment and the right asset classes on which to pounce.


Lee said that with e-commerce taking an ever larger bite out of retail sales, individual retailers and entire malls must reinvent themselves to survive.


"Many retail centers will be rendered obsolete," he said. "Eighty-one percent of people go online before they go to the store, and 66 percent of people go online when they try on a coat in the store.


"What's more, we're already way oversupplied in terms of retail."


It doesn't mean that all retail will collapse, but Lee said operators must find a niche to convince consumers and investors to commit.


Lee said brick-and-mortar stores, like Office Depot, have suffered because they waited too long to make the electronic business an integral part of their portfolios.


Looking at office property sales, Lee said he expects the outlook to be fairly flat in the category. However, limited availability has been pushing up the prices in San Diego.


Lee said while there has been a great deal of multifamily construction, apartments are still getting filled because there remains a substantial gap between renting and buying.


"And then you rent once, you get a divorce, and you rent twice," Lee quipped.


Lee said there will be some very fundamental changes between now and 2030.


"Women will comprise nearly 40 percent of the C-Suite positions by 2025," he said.


He also predicted that the hotel operator Marriott will acquire apartment investment firms.


"Imagine if you got reward points for being in an AvalonBay unit, for example," he said.

< Back to All News & Events

Calendar of Events

< >

April 2018

S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30


Market data provided by: Cassidy Turley BRE Commercial Click here for market trends>


Currrent Mortgage Rates


April 24, 2018