Are We Overbuilding?
The economic outlook is brightening in the major regions of the world. Whether due to low interest rate policies finally having their intended effect, stabilized commodity prices in some countries (Argentina, Brazil, Canada and Russia), state-led efforts (China), or soaring equity markets and rising confidence (the U.S. and Europe), the uptick in near-term growth points to healthy demand for office space in most markets around the world. Still, in most countries, labor markets in major cities are tight, putting pressure on job creation. In others, a new economic cycle is just beginning, with demand for office space lagging behind. As overall global construction of office space has gained significant traction in recent years, the risk of overbuilding in some markets is real. In this report, we investigate how office market conditions will evolve over the rest of the decade and highlight some of the nuances underlying it all.
