FIRE Sector Pushes Demand for Office Space
The traditional leaders in occupancy for office real estate have been finance, insurance and real estate, also known as the FIRE sectors. However, in the wake of the recession sectors such as energy and technology have been driving growth in office real estate. Now, analysts show that the FIRE sector is recovering and ready to once again be the office kings.
According Colliers research, office markets that targeted FIRE sectors absorbed nearly 7 million sq. ft. in the third quarter. These office markets nearly matched the 8 million sq. ft. of absorption in markets that primarily service the intellectual capital, energy and education sectors.
Pete Culliney, director of research at Colliers, commented on these third quarter numbers in a recent article by the National Real Estate Investor, “It’s decidedly still positive. The country is on track this year to create the most jobs in 15 years, office transaction volume is high and the demand is playing out through most of the product types and geographic markets.”
What Does This Mean For Commercial Real Estate Investors?
U.S. and foreign investors are recognizing the U.S. office sector as one of the most stable markets for investing. Buyers are chasing the big office buildings in the top markets for long-term holds, and they are looking to the secondary and tertiary markets as well, while these markets experience increased demand.
Avi Benamu, managing director of New York City-based Winchester Equities, commented to the National Real Estate Investor, “These investors are not expecting a high yield, they just believe, especially the foreign investors, that the U.S. office market is very stable. I think the foreign investors see the instability of their own markets and want to park it here, the most stable and developed nation in the world. For the most part they’re happy to make single-digit yield because they believe in the long-term appreciation here.”
If you’re interested in buying or leasing office space, talk to our Commercial Real Estate Office Services Group. Based on your business’s unique needs and goals, we can help determine a space that’s right for you.