Is telecommuting bringing down the office market?

January 11, 2016 admin

Between 2005 and 2014, the United States saw a 102 percent increase in the number of people working from home, according to Global Workplace Analytics. One of the most common sectors for telecommuting is technology, and many of those companies are headquartered in San Francisco and Silicon Valley.

Companies such as Adobe Systems, Apple, Salesforce, Intel and Google all have work-from-home options for their employees. Automattic, the parent company of WordPress, employs 230 people spread out across 170 cities. Telecommuting is becoming more popular every year — between 2013 and 2014 there was a 6.5 percent increase in teleworkers.

So what does this mean for the office market? As more people start working from home, companies can begin downsizing their office space to save money on rent and other operating costs. But has this trend affected the office market? Not really.

Looking just at Silicon Valley and San Francisco — where all the aforementioned companies are headquartered — office vacancy rates declined by 2.3 percent and 1.5 percent, respectively, from 2014 to 2015, according to research reports from Cushman & Wakefield. Rents also have increased in both regions, showing there is still a demand for office space.

Though telecommuting is gradually becoming a popular alternative to traditional office work, teleworkers still only make up about 2.5 percent of the workforce. It seems the idea that this progression is leading to a downturn of the office market is farfetched at this point. Many tech companies, such as Uber, are actually expanding their office space.

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ZoeWolff119x91Zoë Wolff is a reporter with Institutional Real Estate, Inc.

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