Downtown office vacancy

Issues concerning Downtown as described by the Downtown Council. River to 31st Street, I-35 to Bruce R. Watkins.
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KCPowercat
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Re: Downtown office vacancy

Post by KCPowercat »

Ironic
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Re: Downtown office vacancy

Post by earthling »

JoCo office decline probably also related to this in addition to remote/hybrid trend. Pro Biz jobs (bulk of office jobs) have been declining on the KS side of metro well before pandemic...
https://data.bls.gov/timeseries/SMU2092 ... raphs=true
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KS side financial jobs also took a hit, not yet recovered...
https://data.bls.gov/timeseries/SMU2092 ... raphs=true

MO side recovered OK but stagnant since 2018. Notice the swap between KS/MO sides around 2016...
https://data.bls.gov/timeseries/SMU2992 ... raphs=true
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Re: Downtown office vacancy

Post by earthling »

There was anticipation that April would see a more significant jump in office return but so far in the first couple weeks it actually dipped down some for 10 market average according to Kastle, which tracks actual keycard use, not a survey poll. And the markets that did increase wasn't much. For some reason they aren't tracking national average anymore. When they did it was a couple % points higher than the 10 avg.

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Re: Downtown office vacancy

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Often seeing 70-75% office return mentioned as peak for national average, but a lot of variation on when that will occur. Either way up to 30% away long term is an ugly hit for office industry and lunchtime traffic in biz districts. Downtowns focusing on developing a residential growth blitz in the meantime. And should pursue leisure/public events as it could be a while for biz related events to return near previous level. Office conversions to residential showing to be a challenge with buildings that have large floor plates.
DSA’s Scholes expects downtown office returns to accelerate in coming months as the weather warms and as the city gets a handle on public safety. David Schroedel, executive director of the Downtown Tacoma Partnership, has said office occupancy could be as high as 70% by June.

Hart Hodges, an economist and co-director at the Center for Economic and Business Research at Western Washington University, thinks overall office occupancy will eventually top 70%.
...
For those reasons, Hodges is expecting “a lot of pushback [by workers] for the next at least six months that’s going to keep occupancy in the barely over 60% range.”
https://www.seattletimes.com/business/l ... he-office/
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Re: Downtown office vacancy

Post by earthling »

On a related note..
Business travel is set to steadily--but not exponentially rise--throughout the rest of 2022, according to a new trend report from Deloitte. The annual spend on business travel is expected to reach 55 percent of 2019 levels by the end of the year, based on a survey of 150 travel managers conducted in February. These figures fall short of travel managers' predictions made in 2021.
https://www.inc.com/rebecca-deczynski/p ... tions.html
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Re: Downtown office vacancy

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According to Oxford Economics, KC metro office using employment has recovered with growth only a bit better than flat last couple years but better than Midwest and US avg.

MSP will be one to watch. They've always been a strong market more inline with Denver but showing some trouble recovering with a wide range of stats, more inline with Chicago and STL lately.

Office using employment recovery/growth or lack thereof, not related to remote workers back in office or not..
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Re: Downtown office vacancy

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Hmm, the Kastle 'back to work barometer' is falling again despite anticipated April biz push to bring workers back to office. At least with Kastle's top 10 markets...
https://www.kastle.com/safety-wellness/ ... k-to-work/
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Re: Downtown office vacancy

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State Street downsizing to WeWork in downtown Lightwell building, claims to be due to hybrid work but might also be employee reduction.

https://cityscenekc.com/state-street-do ... ork-space/
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Re: Downtown office vacancy

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Office return still generally flat according to Kastle. Have seen recent rumblings the 3 day/week return approach may not work with any company that is able to do hybrid. Heading toward 'as needed' rather than a set requirement of days/week.

Haven't found any stats or way to determine KC return. Weekday streetcar traffic only metric I've found that may give some indication downtown, can't find any other metric that may give more indication.

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Re: Downtown office vacancy

Post by KCPowercat »

Seems like something downtown council would try and get their finger on
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Re: Downtown office vacancy

Post by earthling »

They may be but not putting out publicly. If they're not they should. The Feds should be tracking this as well as given the apparent economic impact. There appears to be enough staying power with hybrid/remote that we probably need to understand the impact with some official measurements.
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Re: Downtown office vacancy

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Everyone from here on out is gonna be residential. Office is done.
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Re: Downtown office vacancy

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earthling wrote: Wed May 18, 2022 11:18 am They may be but not putting out publicly. If they're not they should. The Feds should be tracking this as well as given the apparent economic impact. There appears to be enough staying power with hybrid/remote that we probably need to understand the impact with some official measurements.

Pretty early to say staying power imo. I mean we still are tracking covid on the daily. The short term office culture since new government guidance allowing more of an unmasked public months ago still seems too soon to make long term assumption on. I know the offices I know of are still very much transitioning and trying to figure out what works
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Re: Downtown office vacancy

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Given it's been 2 years and still apparently under 50% return in most larger markets it's probably time for official Fed tracking. Even at 70% return there should still be official tracking as even 70% could be a problem economically.
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Re: Downtown office vacancy

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More data the better!
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Re: Downtown office vacancy

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Office return didn't increase in April with 10 city avg according to Kastle.
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https://www.kastle.com/safety-wellness/ ... occupancy/


National office lease absorption still negative last Q overall but improving in suburbia for most markets, not as much in CBDs. KC is the opposite according to Q1 posts last page with downtown improving and burbs not (JoCo taking biggest hit).
https://cw-gbl-gws-prod.azureedge.net/- ... d0cd3701b7
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AlkaliAxel
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Re: Downtown office vacancy

Post by AlkaliAxel »

This Downtown forum’s been ghost town the past couple weeks.
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Chris Stritzel
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Re: Downtown office vacancy

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AlkaliAxel wrote: Fri Jun 03, 2022 4:06 pm This Downtown forum’s been ghost town the past couple weeks.
There hasn't been too much to discuss
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Re: Downtown office vacancy

Post by earthling »

^JoCo will be the one to watch for Q2 reports coming next month. They showed a pretty big negative absorption hit last quarter while the rest of the US is showing some suburban office recovery with many urban districts still struggling. KC metro is the opposite so far with a hint of urban recovery already. If JoCo shows another quarter of negative absorption in Q2 that may indicate some red flags beyond remote work impact. KS side of metro also struggling with office employment recovery while MO side doing fine (see several posts back) - that's two independent indicators inline with each other.

On another note, Oxford Economics forecasts that KC metro will have only about 1% year over year overall employment growth through 2026 but curiously a high 3.5% tech growth year over year. Would think that partly depends on how Oracle handles local Cerner jobs and if Tmobile jobs are at least maintained in KC. Small tech otherwise seems to be driving local tech job growth, probably Garmin and upcoming data centers too. Apparently Oxford thinks KC's other sectors won't do very well but I'm not seeing any other indicators to suggest that. Though one potential problem is that KC has been mostly on the losing side of acquisitions.
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Re: Downtown office vacancy

Post by earthling »

Kastle office return not budging much, seems workers still have the leverage. At least in the Kastle top 10 markets...

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https://www.kastle.com/safety-wellness/ ... k-to-work/

Law offices have much higher return rate...
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