The Sad State of Suburban Office Parks

And what to do with all those empty cubicle farms.

Image Wikimedia Commons/Mike Gonzalez (TheCoffee)
Wikimedia Commons/Mike Gonzalez (TheCoffee)

A report from the real estate service firm NGKF released late last year provides new numbers on an ongoing phenomenon: the slow, agonizing death of the American office park. The report looks at five far-flung office tenancy submarkets—Santa Clara, in the San Francisco Bay Area; Denver; the O’Hare region in Chicago; Reston/Herndon outside of Washington, D.C.; and Parsippany, New Jersey—and finds a general aura of decline.

Between 14 and 22 percent of the suburban office inventory in these areas is “in some stage of obsolescence,” suggesting that between 600 million and 1 billion square feet of office space are far from ideal for the modern company and worker. That’s about 7.5 percent of the country’s entire office inventory.

What makes an office park “obsolete?” Arguably the most important amenity for the modern office is location, location, location. This aspect of an office park is difficult to change. So-called Class A office space is in transit-oriented areas that are at least close to highways. These offices don’t need to be in walkable, urban neighborhoods—though that’s ideal. At the very least, today’s workers want to get lunch or maybe even a workout without firing up an engine, NGKF finds. The newest figures from the commercial real estate service firm CBRE bear this out: 10.4 percent of downtown office spaces are currently unoccupied, compared to 15.0 percent of suburban ones.

The decline of the office park is part of a larger story, often told, about shifting American working and housing preferences, from sprawling, isolated, “safe,” and cubicled suburban campuses to more well-connected and increasingly well-funded urban open floor plans. (The office park itself was a rejection of the city: “The first office park opened in Mountain Brook, Alabama, an upper-class white suburb of Birmingham, in the early 1950s as commuters became uneasy with simmering racial tension in city centers,” a recent Washington Post piece notes.)

The growing freelance economy, which sees fewer people traveling to a desk each morning, has contributed to a larger, national decline in the amount of office space occupied by workers. Much of country doesn’t need the wide-open office campus anymore.

But it is perhaps not time to wave goodbye just yet. Not all regions have the same problems with office parks. In Santa Clara, mid-size office spaces are doing okay: Properties between 75,000 and 200,000 square feet have just a 2.4 percent vacancy rate. But office spaces at the ends of the spectrum—smaller than 75,000 square feet or larger than 200,000—have a 13.3 percent vacancy rate. In suburban Washington, D.C., by contrast, workers are enamored with nearby restaurants and conference and fitness centers. The office parks with those amenities have a vacancy rate of 6.7 percent, compared to the total submarket average of 13.9 percent.

Which is all to say: Duh, different kinds and sizes of companies want different things from their office spaces.

But as the world (mostly) marches on without them, what will existing office parks be when they grow up?

There are models that developers are using to transform older office parks throughout the country, to measured success. They mostly involve turning definitely-suburban office parks into urban-like, albeit still isolated, office “cities.” (It is worth noting that many of these projects involve extensive rezoning efforts.) A facility in the community of Edina, Minnesota, is in the midst of transforming from sprawling office center into what one local developer called “not your father’s or mother’s office park.” In practice, that means linking the park to 15 miles of bike trails, big box store-free retail, and green space. Other struggling office parks are talking farmers markets, hotels, and housing.

Sure, those are familiar buzzwords. But it appears that the office park is not going down without a fight.

H/t StreetsBlog USA

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