Notice to Our Readers

The market forecasts supplied by Torto Wheaton Research in Part

Two of the report Commercial Office Real Estate Markets rely on

3rd quarter 1999 data. The forecasts reflect the average lease rates

for Class ‘B’ buildings in the specific metropolitan area. The

metropolitan area includes the Commercial Business Districts

(CBD) and the closer in suburbs.
GSA Office of Governmentwide Policy

October 2000

Real Property

in the

New Millennium

October 2000

U.S. General Services Administration

Office of Governmentwide Policy

Office of Real Property

Real Property

in the

New Millennium
Foreword

ii

THE OFFICE OF GOVERNMENTWIDE POLICY is pleased to issue

the report Real Property in the New Millennium. The report reflects our

organization's promise to provide our Federal customers with

information and data to assist them in delivering world class products and

services to their employees, stakeholders, and the American public. The

millennium report also carries out the General Services Administration’s

(GSA) strategic goal to position the agency to predict, prepare and provide for

the future by identifying workplace-related trends in the public and private

sectors. 

The report is divided into two parts. The first part discusses what experts

from the public and private sectors are saying about the future of office

buildings and the workplace. 

The second and final part of the report summarizes the forecasts for the top 10

growing U.S. commercial office realty markets over the next 10 years. In

addition, we identify the 10 largest U.S. office markets, and provide an

overview on how they will change in the future. Federal real property

managers will know the location of these markets and benefit through

improved planning and budgeting for new Federal buildings, renovations to

existing buildings and negotiations for leased office space. 

I would like to recognize David Bibb, whose Office of Real Property undertook

this research effort. With the guidance of Marjorie Lomax from the Evaluation

and Outreach Division, and under the leadership of team leader Ron Whitley,

the project team of Catherine Blanton, Dennis Goldstein, Carol Moore and

Doris Reinhart (Chesapeake Consulting, Inc.), with contributions by Chris

Coneeney, Andrea Wohlfeld Kuhn and Richard Ornburn produced this

collection of information and data on changes that will impact the office

buildings and new workplace of the future. I would also like to thank the GSA

Office of Communications, in particular David L. Alexander of the Creative

Services Division, for preparing the design of this publication. 

Additionally, we would like to recognize the contributions from those experts

and professionals in the public and private sectors that gave time from their

busy and demanding schedules to provide input for this report. Without your

dedication and participation, this project would not have been possible.

G. Martin Wagner

Associate Administrator

Office of Governmentwide Policy

U.S. General Services Administration
Table of Contents

iii

Executive Summary 1

Introduction 4

Part One: Office Buildings and the New Workplace 5

A. Physical Environment 5

B. Office Location 8

C. Workforce 8

D. Support Services 9

E. Organizational Operations 10

F. Technology 10

G. Real Estate Considerations 11

H. Regulatory Impacts 12

Acknowledgements 13

Part Two: Commercial Office Real Estate Markets 15

Section A: Top Ten Growing Markets 15

Methodology 15

Selection Criteria 16

The Model 16

National Forecast 16

Top 10 Commercial Markets 17

Section B: Ten Largest Markets 24

Next Steps 26

Appendix A: Discussions on Predictions Outlined in Part One 27

Appendix B: Respondent Predictions Matrix 48

Appendix C: Torto Wheaton Econometric Model 51

Appendix D: Exhibits for Top Ten Commercial Markets and Natl. Forecast 53

Appendix E: Resources/References and Supplemental Reading Materials 59

Publication Survey 67

Executive Summary

1

THE GENERAL SERVICES

ADMINISTRATION,

Office of Governmentwide

Policy, Office of Real Property,

recognizes the value of future real

property changes to Federal real

property managers in making wise

decisions. This report identifies

changes and trends that will affect

the way office buildings and the

workspace are designed,

constructed, managed and staffed in

the next 10 years. The report

contains two parts.

Part One reflects information and

data gathered from executives in

Federal, State and local

governments, and global experts

from various professional disciplines

such as real property management,

realty investments, human resources

and information technology, as well

as futurists, academia, economists,

and fast track organizations. Based

on their input, the following trends

will significantly change the office

and workplace in the next 10 years:

• E-commerce will provide

efficiencies in real estate. The

use of e-commerce will offer

benefits to real estate executives

in the areas of purchasing,

communications, realty

transactions and project

management. Benefits of saving

time and money are available by

using the Internet. 

Facility managers will be able to

deliver tenant services at lower

costs and on time using on-line

vendors for building products and

materials. The need to allocate

resources to house and track part

inventories or to dispose of

obsolete supplies and equipment

will gradually disappear. 

Communications through the

Internet will improve the flow and

timeliness of information and data

to facility managers and

customers. Problems with building equipment and systems can be

detected faster and corrective

action initiated. This information

can also be disseminated to

others as preventive measures.

Marketing on-line will allow global

audiences to interact and tour

office properties for sale or for

lease on a twenty-four hours a

day, seven days a week basis

(24/7). Services that close realty

deals will also be available online, such as inspections,

searches, equity financing and

others.

Project management will also

benefit from e-commerce. Delays

and costs in transmitting designs,

plans, and approvals will disappear. Results show that using

the Internet can save one to three

percent of the total project cost.

• Workforce will determine office

locations and transportation

needs. The competition for

knowledgeable workers and

pressures from employees for

good transportation networks will

necessitate organizations locating

near population centers and

providing technology for work

anywhere/anytime. The knowledge

labor force prefers locations near

downtown areas because of more

after hours events and better

mass transit.

• The workplace must be

healthy, productive, flexible

and friendly. The future

workplace will support new office

designs and ergonomic furniture

to improve employee productivity

and reduce computer type
Executive Summary 2

repetitive injuries. Employees will

also be able to customize their

workspace with color, texture and

design configuration options. In

addition, buildings will support

robust technologies that provide

higher-speed connectivity to

transfer information and data to

employees, customers, and

stakeholders. Furthermore, the

workspace will include features

that dampen acoustical levels to

compensate for surrounding

noise.

Buildings and workspace will use

green products and technology to

conserve energy, eliminate waste

and reduce indoor pollution. The

workplace will also provide

natural lighting to promote worker

efficiency and lower energy

consumption. In addition,

employees will be able to adjust

lighting levels and, on a limited

basis, space temperatures to

enhance occupant comfort.

However, many employees will

prefer alternative office

environments (AOE) outside the

traditional office. Workers want

the flexibility of AOE’s, including

telework centers, drop in centers,

port sites, satellite offices and athome locations. These

environments are drivers that

balance employees’ work and

personal lives, improve worker

productivity and lower

environmental pollution by

reducing congestion and

commuting times.

• Sustainable and green designs

will influence offices of the

future. The influence of

government regulations, local

community involvement and

customer demands will drive

offices to be designed,

constructed, and operated using

environmentally friendly

processes, products and

materials. Future buildings will

incorporate new architectural

designs; promote recycling of

land, water, and building

materials; generate their own

electricity; and provide healthy

indoor environments.

The workplace will also offer

more amenities that support

employee quality of life.

Amenities such as banking

centers, ATMs, exercise centers,

daycare, and retailers will locate

within the office building.

Organizations will also subsidize

elder care for employee family

members and service networks to

provide home (maid, and repair)

services while the worker is at the

job.

• Changes in the workplace will

have little impact on the

aggregate demand for office

real estate. In the Federal

government, there will be small

reductions in office space

requirements resulting from

downsizing the workforce, not in

the way employees work.

Agencies will continue their

efforts to privatize (contract out)

certain functions, and to eliminate

programs that are no longer of

strategic importance to carrying

out their missions. 

In the commercial sector, there

appears to be little discernable

impact on the demand for office

space. Even with major increases

in employees using alternative

office environments, office space

will grow, albeit at a slower rate

than in the late 1990's. The level

of construction momentum built

up in the 1990's should continue
Executive Summary

3

and is expected to meet

customers’ demands for new

space in the next 10 years.

In Part Two, the project team

provides a model that identifies the

top ten realty markets that will

experience growth in commercial

office space in the next 10 years.

Historical real estate market data

from Torto Wheaton Research is

coupled with factors and

considerations such as absorption

rates, office completions and others

for the following cities. Cities are

listed alphabetically to facilitate the

ease of navigating the information.

Top Ten Growing Markets

• Atlanta, GA

• Boston, MA

• New York, NY

(Manhattan area)

• Orlando, FL

• Phoenix, AZ

• San Diego, CA

• San Francisco, CA

• San Jose, CA

• Seattle, WA

• Washington, DC

In addition, we relied on the same

market research organization and

identified the ten largest realty

markets in the U.S., and briefly

discuss how the markets will change

in the next 10 years. The cities are

also listed alphabetically.

Ten Largest Markets

• Los Angeles, CA

• New York, NY

(Manhattan area)

• Philadelphia, PA

• San Francisco, CA

• Washington, DC

• Atlanta, GA

• Boston, MA

• Chicago, IL

• Dallas, TX

• Houston, TX
Introduction

4

NEW MILLENNIUM

OFFICES OF THE

TWENTY-FIRST

CENTURY will offer greater

flexibility in design and function, be

energy efficient and technologically

advanced, use building materials

that are healthy and sustainable, and

promote maximum worker

productivity. In addition to places of

work, these office buildings will

become living and dynamic centers

for activities such as childcare

services, places for meeting people,

physical fitness spas, electronic

banking facilities, retail shopping,

and havens for relaxation to meet

the demands and high standards of

the office worker of the future.

Furthermore, these newer office

structures will emit lower levels of

carbon dioxide into the atmosphere,

use water and energy resources

more efficiently, and rely on recycled

building materials to construct and

renovate the building and other

related projects. 

Federal real property executives and

professionals need to be

knowledgeable of issues such as

potential changes in public and

private sector office buildings and

workspace, levels of growth

forecasted in office markets, and

other kinds of related information

and data that influence changes in

future office buildings and

workspace.

To facilitate this, the General

Services Administration (GSA),

Office of Governmentwide Policy,

Office of Real Property, has

produced this report on Real

Property in the New Millennium. The

report is divided into two parts. 

Part One, Office Buildings and the

New Workplace, identifies the

changes from the traditional office

of the past to the new millennium

office building and workspace of the

future. We report on what the global

experts and executives had to say

about the evolution of office real

property in the next 10 years.

Part Two, Commercial Office Real

Estate Markets, identifies and

analyzes the growth of the top 

10 private sector office markets in

the U.S. for years 1999 through 2009.

Using trend data provided by Torto

Wheaton Research, we report on the

office space square footage and

potential vacancy percents that may

exist, the levels of employment

growth, the variation in rental rates

and demand for new office

construction. This forecast only

extends through 2009 since there are

no other research organizations that

provide market forecasts that extend

beyond that year. In addition, we

identify the 10 largest U.S. real

estate markets for commercial office

space and provide an overview of

how the markets will change in the

next 10 years.

There are five appendixes provided

at the end of the report. Appendix A,

Discussions on Predictions Outlined

in Part One, provides further detail

and expands on the summarized

findings as addressed in Part One.

Appendix B is a prediction matrix for

those interviewed entitled,

Respondent and Predictions Matrix.

Appendix C, Econometric Model,

describes the model and defines the

model’s variables. Appendix D,

Exhibits for Top 10 Growing U.S.

Commercial Realty Markets and

National Forecast, provides

forecasts for those 10 markets that

will have the largest growth in

commercial office realty in the

foreseeable future. Appendix E lists

the References/Resources and

Supplemental Reading Materials.
PART ONE: Office Buildings 

and the New Workplace

5

THE EVALUATION AND

OUTREACH DIVISION,

with the assistance of a

contractor, Chesapeake Consulting,

Inc., of Alexandria, VA, prepared this

report. In this part of the report, we

conducted collaborative discussions

and telephone interviews with public

and private sector managers,

professionals, and experts. Thirtyeight experts from public and private

organizations (25 percent Government, 75 percent private sector)

provided their unique insights on

potential changes that would occur

in office buildings and in the

workplace of the future. 

Eight subject categories have been

identified using the information

collected during the collaborative

session with our respondents. 

Physical Environment

Office Location

Workforce

Support Services

Organizational Operations

Technology

Real Estate Considerations

Regulatory Impacts

Each category contains a brief

overview on various predictions that

may affect the future of office realty.

For those readers who want to read

more about certain predictions, we

have included a complete discussion

with details and examples in

Appendix A.

A. Physical Environment

A-1. Use of sustainable

design/materials

Sustainability/greening concepts in

future office buildings will be driven

by customer demands for buildings

that are friendly to the environment

and governmental regulations

requiring environmental compliance

with new laws. The future trend for

constructing buildings and building

components is to use environmentally benign materials and processes.

Materials or components in offices

will be recycled after their useful life. 

A-2. Interior 

Office Environment

• Flexible furniture

The office furniture of the future will

offer total flexibility to the

organization and its employees.

Workspace facilities will easily be

dismantled and reconstructed to

accommodate temporary or longterm purposes.

• Natural light

Future offices and the workspace

will maximize the use of natural

lighting, which is an essential

component to enhance the

productivity of employees. New

office designs of the future will

emphasize locating smaller private

offices at the center core of the

building, thereby allowing more

natural light to penetrate into the

interior workspace. The same

designs will also provide open

atriums and skylights that supply

additional sunlight into the cores of

office buildings. 
PART ONE: Office Buildings and the New Workplace

6

• Ergonomic furniture

Ergonomic furniture designs will

increase productivity and promote

employee health in the workplace of

the future. 

• Private teaming space

Space for teaming will be enclosed

and provide a quiet environment. 

• Personal control 

over the workspace

Workers want more control over

their workspace environment and

freedom of choice - true selfmanagement that is the ultimate

individual freedom. Employees will

want the ability to control the

heating, cooling and lighting, and to

enjoy some privacy within their

workstations.

• Energy conservation

measures

Efforts to save energy in office

buildings and the workplace will

continue to play an important role in

the future. Facility managers will

use direct digital controls to reduce

energy use. New lighting designs in

buildings will reduce energy costs

and improve worker productivity. 

• Plug and play systems

The use of plug and play systems by

organizations will expand and

provide the complete boxing of

electrical, telecommunication and

information technologies service

hookups. 

• Open space

Offices of the future will support

open space configurations that

promote interaction among fellow

workers and promote better access

to natural lighting. 

• Acoustical performance

Open space designs will require

acoustical engineering to be

effective in reducing noise levels.

• Workspace customization

The future workspace may no longer

embrace the concept of one-size fits

all. Employees may have the

opportunity to customize their

workspace by changing workstation

textures, colors, type of seating,

height of partitions, numbers and

type of cabinets, and placement of

task lighting. 

A-3. Facilities 

• New buildings

While sustainability concepts are

gaining increased support, many

existing office buildings are not good

candidates for upgrades.

Customers expect offices that

improve worker productivity and

satisfaction. They want offices that

provide access to natural light, have

efficient and clean electric power,

provide fiber optic cable throughout

the building structure, have a good

site location, offer efficient

transportation networks, provide

more parking and operate on a 

24-hour/7 days a week (24/7) basis.

• Retrofitted buildings

Conversely, advocates for

retrofitting existing buildings point

out that many costs incurred in

constructing a new building have

already been paid, such as site

preparation, building design, roads,

and infrastructure. Historic

preservation and adaptive reuse

further sustainability concepts.

• Leased facilities

There is a trend toward short term

leasing of 3 to 5 years. Changes in

the way people work, where the

workforce is located, right sizing and

downsizing, reorganizations,
PART ONE: Office Buildings and the New Workplace

7

mergers, global competition, global

workforce, product marketing and

product distribution as well as other

evolutions in organizations demand

flexibility. 

• Building design

Hierarchical floor plates that

historically placed executive offices

on the penthouse floor and private

offices near windows will slowly

disappear, in order to reflect the

new, flatter organizational structure.

New office buildings will efficiently

bring together employees from every

organizational stratum to promote

synergy and better collaboration.

• Disposable offices

The "disposable office" is a fully

functional and furnished office

space that can be leased by the hour,

the day, the week, the month or the

year. The office includes telephone,

high speed Internet access and, if

required, administrative support.

This space can be easily vacated as

warranted. Organizations in the

future will use a disposable office

arrangement when costs do not

justify the need for everyday

workplaces. This novel idea will

enable organizations to satisfy

short-term space requirements.

A-4. Building Security

At the government and private

sector level, managers will acquire

and install new security technologies. These technologies include: 

• Biometrics

These devices will be used to read

tenant fingerprints, eye scans, and

voice imprints, replacing the typical

proximity reader for controlling

building access. 

• Digital video 

Improved imaging will improve

security surveillance. Digital

pictures can also be e-mailed to

other security officials in the

building or to management executives in other parts of the world. 

• Greater bandwidths 

Greater bandwidths will provide

facility managers with real-time

remote audio capability that enables

them to hear what is occurring at a

specific location within the building. 

• Internet

Facility executives at remote sites

will be able to control security at

buildings. Information like

occupancy reports, the status of

building lock-ups, and other security

data can be downloaded, reviewed,

and processed through the Internet

(Vergetis Lundin, B.L., p. 97).

• Radio Frequency

Identification (RFID)

Devices 

RFID technology will be used to

document the movement of real

property assets within the building.

Installing antenna readers inside

interior doorways, or hand held

readers at door exits allow RFID

technology to effectively control the

location of material and equipment,

identify who has it, and when it left

the organization.

• Security surveys

The security survey can identify the

type of threats against the building

and the probability of those threats

occurring. Using survey results,

managers can identify and

implement appropriate security

counter measures. 

• Smart cards

Similar to proximity cards that

provide building access, smart cards

will also control access to personnel
PART ONE: Office Buildings and the New Workplace

8

computers, monitor time of computer

use, daily attendance, and track

assets that move through the

building. Furthermore, the smart

card's memory provides personal

and security information on the

employee in the event of an

emergency situation.

B. Office Location

• Traditional settings

Organizations will locate their future

offices near population centers that

support a knowledgeable workforce.

These offices may be located in

downtown areas, near airports, or in

suburban locations. Organizations

will consolidate buildings and

functions as an integral part of their

location strategy. The need for good

transportation networks will play a

larger role in formulating the

organization’s location strategy for

the future.

• Alternative office

environments (AOE)

The demand for non-traditional

office settings will expand in the

future. These AOEs may include:

telework centers, drop in centers,

port sites, and satellite offices, and

home offices. For more information

on AOE’s, see GSA’s publication on

Office Space Use Review, Current

Practices and Emerging Trends,

September 1997.

C. Workforce

C-1. Diversity 

• Age

A diverse age population will staff

future organizations. The "baby

boomers" (born between 1946 and

1964) will prefer office environments

that promote and maintain employee

empowerment and teaming. This

generation exhibits very strong

loyalty to their employers. 

Generation X (born between 1965

and 1977) will prefer to manage

results, not time. Assignments by 

X managers to employees require

little or no oversight unless

specifically requested. This group,

like the boomers, is interested in

teaming. The Xers want on-site

support services such as childcare

and opportunities to continue their

education. This group of workers is

more at ease with flexible working

arrangements like AOEs.

Generation Y (born between 1978

and 1994) will be oriented toward

teaming. This generation, having

grown up with computers, sees them

as basic essentials in the workplace.

(Zemke, Raines & Filipczak).

• Physically challenged 

Once viewed by many organizations

as too costly to hire, the disabled

workforce is now, and will increasingly be in demand by organizations.
PART ONE: Office Buildings and the New Workplace

9

• Retirees 

Shortages among the knowledgeable

workforce will encourage

organizations of the future to hire

retired workers and increase the age

of retirement for existing workers.

Organizations must prepare

themselves to offer older workers

the same amenities that appeal to

younger workers, like part-time work,

flexible work arrangements, flexible

hours, transit subsidies, plus certain

amenities that are specifically

targeted to the aging population

such as on-site medical clinics,

elderly care, and retreat or

meditation rooms. 

C-2. Availability

The future will see a decline in

available/qualified workers. In

particular, experts believe that

Federal agencies will experience

more difficulty in filling career

positions than in the private sector. 

The following factors will contribute

to this decline:

• Global competition 

International competition will make

it difficult for non-global realty

companies to attract and retain

employees because of the

employee's desire to live elsewhere

and enjoy new experiences in other

parts of the world. 

• Abundance of investment

capital 

New employees will be more

adventurous and lean toward

changing careers as investment

capital in new and emerging

technologies open up new, more

lucrative job markets. Employees

will function more as "free agents."

Their loyalty is to their knowledge,

expertise and skill sets - what they

bring to a project, not necessarily to

the organization itself. 

D. Support Services

• Workplace amenities

More organizations will offer new

amenities to attract and retain future

employees. The demand for

employees to have childcare

services, fitness centers, banking

centers, ATMs, exercise areas,

cafeterias, day care, drug and minimart stores and dry cleaning

establishments will result in these

becoming common services in most

office buildings. 

• Elder care

Elder care is an emerging practice

whereby the organization subsidizes

employee expenses to provide daily

care to aging family members. 

• Employee service networks

Organizations will contract with

bonded service providers and offer

employees maid service, car repair,

and home repair, leaving more time

for the employee to spend with

family and to participate in other

activities.
PART ONE: Office Buildings and the New Workplace

10

• Global expansion

Organizations will operate in a

global economy where everyone is

tied together through satellite

communications and the Internet.

Most organizations have operations

around the globe and will continue to

expand these.

• Less centralized authority

The benefits of moving the decision

making process closer to the

customers will continue to decrease

the need for centralized authority in

organizations. Flatter organizations

and downsizing of middle

management is moving decision

making down to the "rank and file"

line workers. Innovation of better

and more powerful information

technology is responsible for moving

more employees out of the

traditional office settings to AOE’s.

This movement away from the

traditional office will also

decentralize decision-making.

• Outsourcing

The future will see a gradual

decrease in the use of in-house

employees that provide

maintenance, janitorial, security, and

landscape services. Organizations

that are concerned over maintaining

and supporting high-level security

requirements and demand proficiency testing are probably best served

by an in-house security operation.

Organizations will form more

strategic partnerships with

outsourced vendors to provide

design services, facilities

management, furniture and other

services. 

Another new idea that is gaining

press is the "all in" service model,

which will enable organizational

employees to obtain everything they

need to accomplish their work from a

single source. This one-stop

shopping service will provide

everything that the customer needs,

such as food services, travel

arrangements, records management,

shipping and receiving, fleet

management, building services,

moves/relocations, furniture,

telecommunications, utilities

maintenance, reprographics, lease

management, and even building

demolition (Westfall, S.L.).

F. Technology

The demand of an expanding

information age will require that a

building's infrastructure have proper

design and construction to support

the customers' latest technology.

The future workplace will support

robust technology that provides

connectivity to employees, customers, and stakeholders. To meet these

expectations, office buildings of the

twenty-first century will incorporate

many new technologies.

• Data cabling

The use of expanded, high-speed

cabling configurations will support

E. Organizational Operations
PART ONE: Office Buildings and the New Workplace

11

evolving communication

infrastructures. These technologies

will include: the ability to carry

digital subscriber line (DSL) for

digital telephone service, e-mail and

direct access to Internet, higher

speed copper wiring, and fiber-optic

cable to support high-bandwidths. 

• Internet

The power of the Internet and

bandwidth will provide greater

productivity and a working

environment that is capable of

responding to change. With the

proliferation of 24/7 communication

services, most workers will be able

to work from anywhere in the world

at anytime and on any day. The use

of e-commerce will provide benefits

in the areas of purchasing,

communications, real estate

transactions, and project

management (Piper, J., p. 36).

• Intelligent buildings

Devices such as sensors in floors,

walls, and ceilings electronically will

feed instantaneous information and

data for quick analysis on the

building and workspace conditions.

These data will provide the ability to

monitor security, lighting, fire and

safety systems, energy management,

power transmission, and environmental control (Caloz, J.W., p. 53). 

• Power systems

The high-tech office buildings and

workspaces will require more

efficient and reliable power systems

to support growth in information

technology. Most problems will be

corrected using the proper sizing of

wiring and effective electrical

grounding within the building.

Office buildings will also have

backup power infrastructures to

support LAN based computer

operations and provide for life safety

support in areas like security systems, fire alarms, CCTV and others.

• Wireless devices

The implementation of wireless

technology will ensure complete

flexibility in the design and

construction of the future office

building and workspace. The

demand for hardwire in the next five

years and definitely in the next 10

years to support intra-office

information technology and

communications will disappear.

G. Real Estate Considerations

G-1. Demand

There is disagreement on the level

of demand for corporate office space

in the future. Most experts believe

that the corporate demand for office

space will continue into the foreseeable future. However, there remains

uncertainty about how much the

demand will be and how long it will

last.

However, other experts see the

office market in a gradual decline.

These experts suggest that vacancy

rates that have remained in the

single digits during the late 1990's

have bottomed out and will begin to

rise in the new millennium. These

same experts also believe that the

economic boom of the mid to late

1990's is cooling down and will slow

the rate of space absorption

(PriceWaterhouseCoopers, 1999). 
PART ONE: Office Buildings and the New Workplace

12

G-2. Financing mechanisms

• Public/private 

partnerships

The use of public/private

partnerships are offering State and

local governments funding to

gradually replace aging facilities

with newer and more productive

units in the future. Through enacted

legislation, more governments will

have the authority to use private

capital to construct buildings that

will revert to government ownership

at the close of a specified outlease

period. Depending on the terms and

conditions of the agreement, the

government’s contribution to the

partnership will change.

• Wall Street financing

Growth of the financial markets will

influence acquisition of real estate

capital. Many large investment

houses will use real estate to

balance their stock portfolios,

reflecting investors’ desires for

greater consistency in investment

yields with reduced volatility.

• Office construction

financing 

The competition for cash to

construct office buildings will also

intensify in the future as lenders

become more cautious. This will

continue to drive returns on real

estate investments downward, make

developers more cautious about

over-building, and increase financing

costs for new construction. 

H. Regulatory Impacts

• Deregulation of utilities

Under a deregulated environment,

consumers will have a choice of who

provides their building service

utilities. 

• Greening

An increasing awareness of limited

resources, pressure from

consumers, and a new sense that

sustainability is fiscally sound will

create international governmentwide initiatives to promote greener

working environments. These may

include energy conservation,

increased use of alternative work

environments, development of

sustainable buildings, and

alternative transportation initiatives. 

• Telecommunications

Telecommunication providers are

demanding Federal legislation that

would provide free and unlimited

access to install and provide

telecommunication services directly

to customers. Conversely, owners,

developers, and managers want to

provide their occupants with

telecommunication services through

license agreements that they

negotiate with the telecommunication providers. This issue will be

resolved through the interaction of

market forces.

• Transportation

Several regulatory initiatives will

increase the collaborative efforts of

Federal, State, local governments

and the private sector to achieve the

common goal of reducing air

pollution and traffic congestion. 
PART ONE: Office Buildings and the New Workplace

13

Acknowledgements

• Jones Lang LaSalle

• Lucent Technologies

• Massachusetts Institute of

Technology

• Nortel

• Palmetto Properties, Inc.

• Portsmouth Consulting Group

• Sentinel Real Estate, Inc.

• Shell International (Netherlands)

• State of Alaska

• State of Pennsylvania

• Steelcase, Inc.

• Sun Microsystems, Inc.

• The Design Alliance

• Trammel Crow, Inc.

• University of California- Berkley

• University of Georgia

• Workplace Change Enablers

We would like to express our

appreciation to the following

organizations in the public and

private sectors that assisted us in

preparing Part One of the Real

Property in the New Millennium

Report:

• Carnegie Mellon University

• Catalyst Consulting Group

• City of Austin Texas

• Coates & Jarrett Consultants

• Crescent Real Estate Investment

Trust

• Cushman & Wakefield

• Department of Defense

• Department of Energy

• Department of State

• General Electric Corporation

• General Services Administration

• Georgetown University

• Honeywell

• International Business Machines 

• Interior Architects, Inc.

• International Centre for Facilities

(Canada)

• Johnson Controls, Inc.
14
15

PART TWO: Commercial 

Office Real Estate Markets

I

N PART ONE, WE

ADDRESSED FUTURE

CHANGES to office buildings

and the workplace. We looked at

how the future workspace will be

energy efficient and productive, will

accommodate the needs of

customers, will be non-toxic to the

environment, and will incorporate

new designs and technology. In Part

Two of the report, we look at the

changes that will occur in selected

office real estate markets across the

Nation. This is presented in two

sections. Section A, Top Ten

Growing Markets, presents a

forecast through 2009 for 10 U.S.

cities that will achieve the largest

level of market growth in the area of

commercial office real estate.

Section B, Ten Largest Markets,

identifies the 10 U.S. cities that have

the largest real estate markets in

commercial office space, and briefly

discusses how the markets will

change in the foreseeable future. All

statistics provided in this portion of

the report are provided through a

professional research organization

and other experts, and do not

represent the official views of the

U.S. Government.

Federal managers should know

where these real estate markets are

for those cities where governments

have buildings. The various market

forecasts provide important

information on future charges in

commercial office buildings. This

information can enhance the

accuracy of planning and budgeting

for renovations to Federal buildings.

It also has the potential for use with

the new tools in GSA’s proposed

Federal Property and Administrative

Services Act amendments,

disposals, and negotiations for

leased space.

A: Top Ten Growing Markets

Methodology

The 10-year forecasts for the realty

markets that will experience the

largest market growth use a

consensus approach. Forecasts rely

on historic real estate market data

like geographical area, projected

market growth, investment potential

and technology leaders.

Six organizations were identified as

potential suppliers of realty market

forecasts. These organizations

include:

• Torto Wheaton Research

• Milken Institute

• Entrepreneur Magazine

• PricewaterhouseCoopers

• Landauer Associates

• Dun and Bradstreet
PART TWO: Commercial Office Real Estate Markets

Selection criteria

Comparing market forecasts

(excluding Dun and Bradstreet),

using the selection criteria below,

the team identified the 10 realty

markets that will exhibit the largest

growth during the 10-year period.

Dun and Bradstreet was excluded

because it consists of a one-time

study tracking the migration of

businesses and jobs between 

states.

• Projected market growth

• Supply-demand for office

space

• Vacancy and rental rates

• Top technology locations

• Investment potential

• Multifaceted environments

The Model

The Torto Wheaton econometric

model was used to forecast the

future demand for commercial office

space and change in rental rates.

The major variables in the model are

office square footage, absorption

rates (national market only), rental

rates, vacancy rates, employment

levels and new office construction

(completions). Appendix C

discusses the model in greater

detail and defines each model

variable. Appendix D provides real

estate market forecasts for the top

10 growing U.S. cities and the

national forecast.

Two different sets of data from the

model provide the statistics. The

data used to develop the national

forecast rely on 54 major U.S.

markets and cover the time period

from 1999 through 2009. These data

consist of historical trend

information. The top 10 U.S. cities

use a subset of the 54 markets and

reflect the projections for these

growing markets.

Torto Wheaton’s renowned

reputation as a leader in preparing

real estate market forecasts for

various types of commercial

property, plus their ability to provide

forecasts that cover more than five

years, was the basis for selecting

their published research for the

purpose of this report. Many of the

remaining organizations that publish

real estate market forecasts do not

speak to office buildings but focus

on retail, residential or technology

facilities. Additionally, these same

organizations limit their forecasts to

less than five years.

Torto Wheaton Research has

received international recognition as

a premier provider of commercial

real estate forecasts, analyses, and

research. Their proprietary propertylevel database enables them to

forecast and analyze supply and

demand trends in commercial real

estate. Torto Wheaton Research

covers 54 U.S. markets, including 

72 metropolitan statistical areas, and

24 international markets. Founded in

1982, Torto Wheaton is backed by 

CB Richard Ellis, the world’s leading

global real estate services company. 

National Forecast

The model forecasts that there will

be a slowdown in the growth rate for

office employment. It also indicates

that the construction of new office

buildings will gradually decline as

we move forward into the twentyfirst century. Even so, the major

realty markets will continue to

increase the stock of office space to

satisfy customer demands, albeit at

a slower pace. Despite the

slowdown in job growth, and in new

16
17

PART TWO: Commercial Office Real Estate Markets

office construction activity, office

rents should continue to increase

slowly over the 10-year period.

Consumer spending and business

investment should remain robust.

The strong economy will support

above average rates of absorption

for office space that will gradually

decline during the period. This in

turn will slow down the increase in

the national market vacancy 

rate. 

The National forecast is presented

in Exhibit 1 in Appendix D and

summarized as follows:

• Projected job growth should

decrease from a 3.9 percent

growth rate in 1999 to a low of 

1.8 percent in 2000 and increase

slightly to 2.0 percent by 2009. 

• Growth in rental rates will remain

positive and increase slowly.

Rates will remain mostly flat in

comparison to the increases that

occurred in the 1990's. The

spillover effects of a healthy

office real estate market of the

late 1990's will continue to

increase rental rates even as

newer constructed buildings

come on line.

• Vacancy rates should continue to

increase as absorption of office

space slows, and new projects

come online. However, the real

estate market for office space

should remain tight until 2001,

with the vacancy rate below 

12 percent. Over the long term,

vacancy rates are expected to

stabilize in the range of 13 to 

14 percent.

• New office construction will

continue to be strong through 2002

with an average completion rate

of approximately 80,000,000

rentable square feet (rsf) coming

on line per year. 

• Net absorption should continue 

to increase from a low of 

41 percent of completions in 1999,

or 35.6 million rsf, to 96 percent in

2009, or 49.9 million rsf. 

Top Ten Commercial Markets

Listed below are the top 10 growing realty markets in the U.S., followed

by discussions on changes to office realty in the new millennium. The

markets are listed alphabetically to improve navigation of the

information.

• Atlanta, GA

• Boston, MA

• New York, NY 

(Manhattan area)

• Orlando, FL

• Phoenix, AZ

• San Diego, CA

• San Francisco, CA

• San Jose, CA

• Seattle, WA

• Washington, DC
PART TWO: Commercial Office Real Estate Markets

Atlanta, GA Forecast

(includes the areas of Metropolitan Atlanta, Buckhead and

North Fulton)

Atlanta continues to be a focal point

for business development. Atlanta

benefits from the migration of

businesses from the northeast to the

south and southwest. It also serves

as a major transportation hub, which

attracts new businesses.

The Atlanta forecast is presented in

Exhibit 2 in Appendix D and is

summarized as follows:

• The rate of employment growth

was high in 1999, at 6.2 percent.

Thereafter, employment growth

should be relatively flat,

averaging a 3.0 percent rate of

growth annually.

• Even though new construction will

continue steadily throughout the

forecast period, the strong

economy and demand for office

space will result in increasing

rental and absorption rates. The

rental rates will steadily increase

from $19.05 per rsf in 1999 to

$23.22 per rsf in 2009.

18

• Vacancy rates will increase

between 1999 and 2001. Thereafter

the rates will remain fairly stable,

averaging around 12.5 percent.

• The new construction explosion

began in 1997, when the number of

new office completions increased

from 1,472,000 rsf to 5,693,000 rsf.

This rate of new construction

should continue through the

forecast period, decreasing only

slightly by 2009, with 4,140,000 rsf

of office space coming on line.

Boston, MA Forecast

(includes the areas of Boston NECMA (New England County

Metropolitan Area), Suffolk County and Essex, Norfolk,

Middlesex, Worcester, Plymouth and Bristol counties in

Massachusetts, plus the counties of Hillsborough, Rockingham

and Strafford in New Hampshire. The major cities included in

the NECMA are Boston, Cambridge, Lynn, Waltham and

Gloucester)

Boston continues to serve as a

center for high tech and innovation.

Its proximity to educational

institutions like Harvard University

and MIT has shored up its market

position. A strong economy in the

area contributed to the high demand

for new office space in the late

1990's, which should continue into

the new millennium.

The Boston forecast is presented in

Exhibit 3 in Appendix D and is

summarized as follows:

• Projected job growth should

steadily decrease over the 10-year

study period, which will contribute

to the increase in vacancy rates.

• The strong economy and

increasing demand for office

space and rental rates will remain

high even though new construction will come on line and vacancy

rates are rising slightly.

• The vacancy rates will increase

through 2005.

• The high rate of new office

construction will continue

between 1999 and 2003 with

annual increases of 13.8 percent,

19.5 percent and 8.0 percent

respectively. Thereafter, the new

construction rate will gradually

decline.

Atlanta Federal Center

Atlanta, GA
19

PART TWO: Commercial Office Real Estate Markets

New York, NY Forecast

(includes the areas of midtown north and south, midtown and

downtown)

The Manhattan office market represents the largest office market in the

U.S., comprising over 355 million rsf

of competitive office space. The City

has been experiencing a dynamic

economy as a result of the success

of Wall Street. Rising corporate

profits have led to steady job

growth, which in turn has tightened

the office market. The Metropolitan

area has experienced cuts in

government payrolls; however, job

growth in the private sector has

been very strong. 

New York continues to develop its

presence in the new media and entertainment industries at a rapid rate

while information technology firms

have expanded in the area. The city’s

economy will soften over the next 

10 years. Employment growth will

slow to around 0.6 percent by 2006.

The vacancy rate for the Manhattan

office market has been quite low 

in the late 1990's, averaging around 

5.4 percent. The steady infusion of

new construction has helped to keep

the vacancy rate fairly stable. The

average lease rate in this market

continues to increase.

The New York forecast is presented

in Exhibit 4 in Appendix D and is

summarized as follows:

• Job growth will remain fairly flat

over the forecast period with

almost no growth projected for

the last six years of the forecast

period.

• Average rental rates will continue

to increase through 2002 when the

city will experience a negative

absorption rate. The rents will

peak at $44.48 per rsf, decreasing

to $34.95 per rsf in 2009.

• Shrinking vacancy rates will lead

to a moderate increase in new

office development over the next 

4 to 5 years.

• The City will experience a

negative absorption rate from

2002 through 2004; however,

significant increases in new

construction will help meet the

demand for office space. 

U.S. Courthouse

Boston, MA

U.S. Courthouse 

at Foley Square

New York, NY
PART TWO: Commercial Office Real Estate Markets

Phoenix, AZ Forecast 

(includes the areas of Phoenix, Sun City, Glendale, Squaw

Peak, Paradise Valley, Camelback Corridor, Scottsdale,

Tempe, Mesa, Superstition Corridor, Chandler/Glbert, Deer

Valley, Litchfield Park and Tolleson)

Phoenix represents another growth

city that enjoys the migration of

business to the south and southwest.

Phoenix has experienced a surge in

new office construction since the late

1990's, which should continue into the

new millennium. Employment growth

continues, which has contributed to

an increase in the rental rates.

The Phoenix forecast is presented in

Exhibit 6 in Appendix D and is

summarized as follows:

• Employment growth rates will

increase between 1999 and 2000,

from 1.9 percent to 4.3 percent.

Thereafter, the growth rate will

remain fairly constant.

• Rental rates should continue to

increase in spite of the new

construction coming on line, due to

strong employment growth and

absorption rates. Forecasts show

that rates will climb to $26.84 in

year 2009, representing a 34 percent

increase over 1999 levels.

• The vacancy rate will remain flat

at an average rate of 13.9 percent

throughout the 10-year period.

• New construction should continue

at a high rate through 2003.

Thereafter, the new construction

rate will slightly decrease through

2009 to 2,852,000 rsf.

20

Orlando, FL Forecast 

(includes the areas of Orlando, Lake Mary, Heathrow and

Maitland Center)

There has been a general shift in the

1990's toward the south and southwest, contributing significantly to the

economy in the Orlando area. This

trend should continue into the new

millennium as the Orlando technology

market continues to receive support

due to its close proximity to the

National Aeronautics and Space

Administration Space Center.

The Orlando forecast is presented in

Exhibit 5 in Appendix D and is

summarized as follows:

• Going forward into the new

millennium, the rate of growth will

remain fairly constant at an

average rate of 2.9 percent.

• The rental rates will decrease to

$18.14 per rsf in 2004 as vacancy

rates increase. Thereafter, the

opposite will occur as rental rates

increase to $20.48 per rsf in 2009

and vacancy rates decrease.

• Vacancy rates will increase as new

construction comes on the market,

peaking at 19.7 percent in 2002. As

new office construction slows,

vacancy rates will gradually

decrease to somewhere around

12.1 percent in 2009.

• Orlando experienced a surge in

new office construction between

1998 and 1999. However, new

construction will begin to slow

down in 2001 with significant

decreases forecasted through 2009.

New construction will reach a high

of 2,776,000 rsf in 2001 to drop to a

low of 202,000 rsf in 2006, with a

gradual rebound through 2009.

Phoenix Federal Building and U.S. Courthouse

Phoenix, AZ

“Government Plaza”

Orlando, FL

(Federal, state and 

local facilities)
21

PART TWO: Commercial Office Real Estate Markets

San Francisco, CA Forecast 

(includes the areas of San Francisco, Yerba Buena, Mission

Bay, China Basin and Potrero Hill)

San Francisco enjoys some of the

economic prosperity associated with

the growing technology industry in

nearby Silicon Valley. It also ranks

as one of the top five regional areas

for investment banking. This healthy

economic environment coupled with

a significant increase in new office

construction has made San

Francisco a desirable location for

new and expanding businesses.

San Francisco led the office market

with the largest rent increases in the

late 1990’s. However, future rental

rates will decline due to the

increasing levels of completions and

climb in vacancy rates. 

The San Francisco forecast is

presented in Exhibit 8 in Appendix D

and summarized as follows:

• The amount of office space in San

Francisco should increase from

71,453,000 rsf in 1999 to 98,083,000 

rsf in 2009, an increase of 37

percent.

• Rental rates will continue to

fluctuate, reaching a high of

$38.19 per rsf in 1999, to a low of

$29.65 per rsf in 2006, with a slight

rebound to $33.85 per rsf in 2009.

In the future, rental rates will

begin to decline as new

construction comes on line and

employment growth slows.

• The vacancy rate for this market

was very low in 1997 and 1998; 

3.3 percent and 4.2 percent

respectively. This low vacancy

rate reflects the decrease in new

construction between 1991 and

1996. However, as new

construction comes on line in 1999

through 2003, vacancy rates will

increase from 8.4 percent in 1999

to 15 percent in 2004 with a slow

decline to 9.8 percent in 2009.

San Diego, CA Forecast 

(includes the areas of San Diego, Governor Park, Mission

Valley, Scripps Ranch, Miramar, La Jolla, Kearny Mesa, North

Beach Cities, Escondido, Carlsbad, Sorrento Valley, Rancho

Bernardo, Poway/Rancho Pen, San Marcos/Vista, Torrey

Pines, Sorrento Mesa, Temecula, Oceanside, Mission Gorge

and Del Mar Heights)

San Diego, like San Jose and San

Francisco, has experienced

significant growth and economic

prosperity as a result of the

developing technology influence.

High tech industries such as

Qualcomm have located in San

Diego, which has attracted other

high tech and related businesses to

the area. San Diego should continue

to experience high demand for office

space into the new millennium.

The San Diego forecast is presented

in Exhibit 7 in Appendix D and

summarized as follows:

• Projected job growth will

increase, from 2.9 percent in 1999

to 3.6 percent in 2001. The growth

rate will decrease slightly through

2009 to 3.0 percent.

• The strong economy and demand

for office space will continue to

push up rental rates even with

new construction coming on-line.

• The vacancy rate will remain flat,

between 1999 and 2003, at an

average rate of 9.2 percent,

increasing slightly to 10.8 percent

by 2009. This increase reflects the

growth in new construction

throughout this period.

• There has been a boom in new

office construction in San Diego

since 1998. A steady stream of

new office construction should

continue through 2009.

Ronald Reagan Federal Building and 

U.S. Courthouse

Santa Ana, CA

U.S. Court of Appeals Building

San Francisco, CA
PART TWO: Commercial Office Real Estate Markets

Seattle, WA Forecast 

(includes the areas of Metropolitan Seattle extending from

Pioneer Square to the northern shore of the Lake Washington

Ship Canal; the Northend which extends north of the ship canal

to the Snohomish County Line; Tacoma/Ederal Way, comprising Pierce County; the Eastside, comprising all of King County

directly east of Lake Washington, plus that portion of Bothell

extending into Snohomish County; and Snohomish County)

The Seattle area has become a hightech mecca. The entire job market

has shifted from reliance on

manufacturing industries like

Boeing, to information technology,

notably Microsoft. As a result of this

shift, the demand for office space in

the 1990's will remain strong. The

strength of the economy has

supported moderate vacancy rates,

but the rates will rise significantly

as new space is brought into the

market. New construction increased

253 percent between 1996 and 1997,

and in 1998, it was up by 371 percent.

However, the increased levels of

construction activity will slow down.

In fact, the rate of new construction

should begin to decline in 2001 and

continue through 2009. 

The Seattle forecast is presented in

Exhibit 10 in Appendix D and

summarized as follows:

• The strong job growth experienced

in the late 1990's will decline to

basically no growth in 2000 and

then hedge upward to 2 percent 

by 2001, to approximately 3 percent

in 2009.

• Growth in rental rates will remain

fairly stable over the forecast period, averaging about $22.00 per rsf.

• The vacancy rate will increase to

approximately 16.0 percent in 2001

and decrease to 12.3 percent in

2009. The increase in rates

parallels the construction of 

new office buildings during the

1998 through 2000 time period. 

• New office construction will begin

to slow down over the next 10

years, from 5,676 completions in

1999 to 1,310 completions in 2009,

or a decrease of approximately 

77 percent.

22

San Jose, CA Forecast

(includes the areas of San Jose, Silicon Valley, Militas, Los

Gatos, Saratoga, Cupertine, Santa Clara, Sunnyvale, Mountain

View, Los Altos and Palo Alto)

The San Jose area has become a

center for high technology

companies, similar to Silicon Valley.

Many of the major technology firms

are located in this area, including

Netscape, 3Com, Intel and Cisco

Systems. It ranks among the top

areas in technology production. As

a result, the economic environment

for this area remains robust and the

demand for office space continues

to climb. Until 1998, there was very

little new construction, resulting in a

significant increase in rental rates.

The San Jose forecast is presented

in Exhibit 9 in Appendix D and is

summarized as follows:

• Projected job growth should

remain fairly flat, at an average of

2.0 percent, after decreasing from

3.2 percent in 1999.

• Rental rates will decrease from a

high of $29.35 per rsf in 2001 to

$25.58 per rsf in 2006 with a slight

rebound to $26.77 per rsf in 2009.

• Vacancy rates should increase as

a result of lower rates of

employment growth and increased

construction activity.

• New office construction will

remain strong through 2004.

Thereafter, new construction

should steadily decrease.

Robert F. Peckham 

Federal Building and 

U.S. Courthouse 

San Jose, CA
23

PART TWO: Commercial Office Real Estate Markets

Washington, DC Forecast

(includes the areas of Washington, DC, Fairfax, Loudoun,

Stafford, Prince William, Montgomery, Prince George’s,

Calvert, Charles and Fredrick counties)

The DC office market, one of the

largest in the U.S., has a total 

inventory of approximately 225

million square feet of competitive

office space. The downtown

Washington, DC office market

continues to demonstrate good

growth and should continue its

growth well into the new millennium.

New construction continues to

climb, and vacancy rates are also

moving upward.

While there has been some negative

job growth in the Washington area

due primarily to Federal downsizing,

predictions are that job growth

should be strong due to the private

sector moving into the area.

Employment should increase from

731,000 office jobs in 1999 to 915,000

in 2009, or a 25 percent gain in jobs.

A key ingredient of the job growth

and demand for office space in the

metropolitan Washington area

comes from emerging computerbased and biotech businesses

developing in the suburban areas.

The Washington forecast is

presented in Exhibit 11 in 

Appendix D and is summarized 

as follows:

• Rental rates will continue to

increase over the next 4 years

from an average of $25.92 per rsf

in 1999 to $29.60 per rsf in 2002.

After that time, rates will start to

fall and have a slight rebound in

2009.

• The vacancy rates will rise to

around 14.9 percent in 2004, and

gradually slide, reaching a low

point of 8.9 percent in 2009 as

high-tech industries absorbed

new building completions. The

increase in vacancy rates appears

to be associated with large

inventories of new space coming

on line during the early 2000's. 

• New office completions will peak

in 2002 with 14,544,000 rsf coming

on-line. In 2009, the number of

office completions will decrease

to 1,185,000 rsf, or a decrease of 

92 percent.

U.S. Courthouse

Seattle, WA

Ronald Reagan Building 

and International Trade Center

Washington, DC
PART TWO: Commercial Office Real Estate Markets

New construction in the Chicago

area will remain moderate. Only two

buildings totaling 754,000 rentable

square feet (rsf) are scheduled for

delivery in year 2000, and two

additional buildings totaling 

1,700,000 rsf are scheduled for year

2001. This moderate level in activity

is expected to drive vacancy rates

downward in the future as office

space is gradually absorbed.

24

Section B: Ten Largest Markets

Relying on similar information

provided by Torto Wheaton

Research, the team identified the 10

largest office real estate markets in

the U.S. Selections are based on the

total rentable square feet (rsf) of

commercial office space in the city.

Furthermore, we have provided a

brief overview on selected cities and

what changes can be expected in

real estate in the next 10 years. 

Chicago, IL Forecast 

(includes the area of Metropolitan Chicago)

The vacancy rate has been steadily

decreasing due to the strong

demand and delayed occupancies.

The net absorption for the first part

of 2000 exceeded one million rsf of

office space.

Rental rates have been increasing

only moderately. The continued lack

of quality office space should cause

rates to increase in the future.

Current office rental rates range

from $20.00 to $25.00 per rsf.

• Atlanta, GA

• Boston, MA

• Chicago, IL

• Dallas, TX

• Houston, TX

• Los Angeles, CA

• New York, NY 

(Manhattan area)

• Philadelphia, PA

• San Francisco, CA

• Washington, DC

Chicago Federal Center

Chicago, IL

Ten Largest Commericial Markets

The city markets that are italicized below are not part of the brief

overview in this section of the report, but have been addressed

beforehand in Part Two, Section A. The markets are listed alphabetically to facilitate the ease of navigation through the information.
25

PART TWO: Commercial Office Real Estate Markets

The Dallas Central Business

District continues to experience the

highest vacancy 

rate at 28 percent,

which is attributed to corporate

relocations into

the suburbs to

newer office

buildings.

However, the

absorption rate 

is expected to

remain strong in

the future.

The rental rates

continue to

decrease. The

average rental

Dallas, TX Forecast 

(includes the areas of Metropolitan Dallas, Las Colinas,

Richardson, Plano and Turtle Creek)

The Dallas economy is expected to

show steady improvement in economic conditions with an unemployment rate below the national level.

The demand for office space should

remain constant in spite of a

shrinking employment base.

Construction activity for office

space has been steadily decreasing.

In year 2000, approximately 

2,415,491 rsf of office space was

under construction as compared

with approximately 10,000,000 rsf

during the comparable period in

1999. This can be attributed to the

large vacancy rate that exists in the

region.

The vacancy rate has remained

relatively unchanged at 18 percent.

Houston, TX Forecast 

(includes the areas of Metropolitan Houston, S. Montgomery

County, NASA/Clear Lake and E. Fort Bend County)

Houston experienced a large volume

of new office construction in 1999.

As a result, new office construction

in the near future is expected to be

significantly less, with developers

waiting for long-term, committed

tenants before commencing further

construction.

The citywide vacancy rate has been

steadily increasing to 12.5 percent in

the first quarter of 2000. The net

absorption rate has also been low.

The relatively cautious approach to

new construction will give the

market a chance to fill existing

vacant space. The projection is for

demand to increase, especially in the

downtown office buildings where

there is more quality space.

The office rental rates are projected

to remain high. Houston’s office

rental rates, which historically

correlate with oil prices, have

rebounded with the spike in crude oil

prices.

The Houston economy, which is

primarily dependent upon gas and oil

exploration and sales, is benefiting

from the fact that crude oil prices

reached a nine-year high in early

2000. This improvement in economic

conditions is expected to have a

positive impact on the demand for

office space in the future. 

Alliance Tower 

Federal Building

Houston, TX

A. Maceo Smith Federal 

Building, Dallas, TX

rate for all classes of buildings is

approximately $20.00 per rsf.
PART TWO: Commercial Office Real Estate Markets

Los Angeles, CA Forecast 

(includes the areas of Metropolitan Los Angeles, San Fernando

Valley, San Gabriel Valley, South Bay and Ventura)

Over the last 5 years, the Los

Angeles economy has experienced

strong growth resulting in the

creation of 301,000 new jobs. The

employment growth rate in Los

Angeles is projected to increase 

1.42 percent between 2001 and 2005.

This represents a significant growth

in employment over the previous five

years. As a result of the positive

economic climate and employment

growth, the demand for office space

is projected to continue to

experience strong growth. 

Over the last two years, construction

consistently ranged between two to

three million square feet. West Los

Angeles and the San Fernando

Valley are the most active submarkets, accounting for 88 percent of

the first quarter, year 2000, total rsf

under construction. 

The vacancy rate has been steadily

decreasing, reaching an 18-year low

in 2000, of 11.3 percent. The net

absorption was 2,180,508 rsf, the

26

Next Steps

1. We plan to conduct a second

review within the next two or three

years, to identify how the predictions and forecasts compiled in this

publication benefited the Federal

real property community.

Specifically, the team wants to look

at the type of changes that are

being implemented in buildings and

the workspace, and to learn why

some were chosen over others as

well as the benefits derived.

largest gain in 10 years. This strong

absorption rate is projected to

continue.

New office buildings combined with

tighter vacancies continue to

pressure lease rates up and

rejuvenated the market for quality

office space. Average lease rates

are approximately $22.00 per rsf.

Construction activity is taking place

mostly in the Delaware and Philadelphia suburban markets. Approximately 2.3 million rsf are under

construction and due to be delivered

in year 2000, and 8.3 million rsf are

scheduled for 2001. It is expected

that the tight Delaware office market

will relax a bit when these new office

buildings are completed.

Philadelphia, PA Forecast

(includes the areas of Metropolitan Philadelphia, Bala Cynwyd,

Delaware County, Fort Washington, King of Prussia, Plymouth

Meeting, Blue Bell, Upper Main Line, Camden County, NJ,

Suburban New Castle County, DE)

The overall vacancy rate has been

decreasing as new office buildings

come on line. The absorption rate is

expected to remain strong in the

future, especially in the Philadelphia

suburban market where most of the

new construction is taking place.

Rental rates continue to increase for

the metropolitan office market and

average about $23.00 per rsf. 

2. The team plans to provide information and data, as it becomes available, through GSA’s Office of Real

Property’s Policysite Newsletters on

what the public and private sectors

are doing to enhance the quality and

productivity of office buildings and

the workspace. The sharing of this

material will strengthen management’s interest in pursuing quality

workspace initiatives, provide real

time input on workplace changes,

and help others by learning from

those that have confronted

successes as well as setbacks. 

Roybal Center and Federal Building

Los Angeles, CA

U.S. Custom House

Philadelphia, PA
Appendix A:

27

THIS APPENDIX EXPANDS

ON AND DISCUSSES IN

GREATER DETAIL those

predictions outlined in Part One

A. Physical Environment

A-1. Use of sustainable

design/materials

To effectively implement a

sustainable strategy, there are a

number of factors that must be

recognized and addressed, as

outlined in the GSA Real Property

Sustainable Development Guide. In

the future, materials or components

in offices will be recycled after their

useful life. 

Approximately two billion people

now work in buildings. This number

is expected to climb as high as eight

billion in the next 50 years. The

Department of Energy forecasts that

by the year 2010, another 38 million

buildings will be constructed

worldwide that will further impact a

fragile and out of balance ecological

system (Roodman & Lenssen, p. 5).

Buildings use approximately onesixth of the world's fresh water

supplies, one-quarter of the wood

harvested and two-fifths of the

material and energy reserves

(Roodman & Lenssen, p. 5). The

impact that modern buildings have

on people and the environment is

better understood in table A.

Discussions on Predictions 

Outlined in Part One

regarding what can be expected in

future office buildings and the

workplace. 

Table A: Impact of Building Materials

Problem Buildings’ Share Effects

of Problem

Use of Virgin 40% of raw stone, gravel, Landscape destruction, toxic 

Materials and stand; comparable runoff from mines and tailings, 

share of other processed deforestation, air and water 

materials such as steel. pollution from processing.

Use of 25% for construction. Deforestation, flooding, 

Virgin Wood siltation, biological and 

cultural diversity losses.

Use of Energy 40% of total energy use. Local air pollution, acid rain, 

Resources damming of rivers, nuclear 

waste, risk of global warming.

Use of Water 16% of total water Water pollution; competes with 

withdrawals. agriculture and eco-systems 

for water.

Production Comparable in industrial Landfill problems, suchas 

of Waste countries to municipal leaching of heavy metals 

solid waste generation. and water pollution.

Unhealthy Poor air quality in 30% Higher incidence of sickness, 

Indoor Air of new and renovated lost productivity in $10 of 

buildings. billions annually.

Source: Worldwatch Institute
Appendix A: Discussions on Predictions Outlined in Part One

28

(49 percent of sulfur dioxide

emissions, 25 percent of nitrous

oxide emissions, 10 percent of

particulate emissions, and one-third

of carbon dioxide emissions), the

interest in constructing

environmentally friendly buildings

has increased. 

The following are examples of a

sustainable approach to developing

office buildings.

In the Netherlands, new buildings

integrate natural shapes, make

extensive use of green plants and

promote environments that are

pleasant and healthy. The new

Dutch buildings must also adhere to

laws, similar to those in Germany,

which specifies the distance that the

employees’ workspace must be from

a natural light source. 

Here in the U.S., the Condé Nast

Building at Four Times Square in

New York City uses rainwater runoff

for toilet flushing and environmental

(chiller) cooling. The floors are

covered with recyclable carpet, have

photovoltaic systems (solid-state

semiconductor devices) that provide

some part of the building’s electrical

energy requirements, and use

recyclable concrete and steel

materials in construction.

The Pennsylvania Department of

Environmental Protection’s “green”

office building in Ebensburg,

Cambria County, Pennsylvania, is

constructed on a brownfield site (an

abandoned, idled, or under-used

industrial and commercial facility

where expansion or redevelopment

is complicated by real or perceived

environmental contamination). The

building is constructed with recycled

and virgin materials that limited the

environmental impact based on

waste reduction and energy required

Consumer attitudes and pressures

from the local communities are

driving the demand for sustainable

designs in future buildings.

Customers and government clients

will soon insist that organizations

that they do business with are

environmentally responsible. Since

the release of data demonstrating

that buildings are a major air polluter

The Condé Nast Building @ Four Times Square

New York, NY
Appendix A: Discussions on Predictions Outlined in Part One

29

for fabrication. The lobby floor is 

70 percent recycled post-industrial

and post-consumer glass. The

building is constructed using nonVOC-emitting paint, recycled

asphalt, recycled structural steel,

recycled carpet, mechanically

fastened roofing membrane to

minimize adhesive use, and wood

products harvested from certified

sustainable forests. 

A-2. Interior Office

Environment

• Flexible furniture

Most of our experts see office

furniture as providing unlimited

flexibility. The furniture found in

tomorrow's offices will be mobile,

with wheels. Tables, files, partitions,

and chairs will provide easy

adjustments, allowing customers to

constantly reconfigure their

furniture. This will satisfy task

requirements such as teaming,

provide additional privacy, and

promote organizational changes,

such as reorganizations and

realignments. 

• Natural light

In recent years, the benefits of

natural lighting have been the

subject of research among experts.

For example, studies of 2,000 school

students in California revealed that

scores on math exams were 20 to 

26 percent higher for students that

received instruction in rooms with

daylight exposures. In the same

study, it was discovered that when

commercial store products were

displayed in a daylight setting that

sales increased by a whopping 

40 percent (Pacific Gas and Electric

Study). The ING Bank in the

Netherlands and Lockheed in

Sunnyvale, CA also reported that

the level of worker productivity

increased by 15 percent, and

absenteeism was 15 percent lower

among employees in natural light

settings. 

Medical researchers have also

identified that exposure to sunlight

maximizes the human brain's

production of serotonin. The brain

Pennsylvania Department of Environmental Protection

Ebensburg, PA
Appendix A: Discussions on Predictions Outlined in Part One

30

needs an appropriate amount of this

chemical to keep a person alert and

lively. Employees that lack adequate

production of this chemical become

lethargic, sleepy and less productive. 

Another consideration is that unlike

natural lighting, artificial lighting

consumes non-renewable sources of

energy, and contributes to warming

within the building envelope, thus

requiring the installation of larger

heating ventilation and airconditioning (HVAC) systems to

dissipate the excess heat. HVAC

systems are a main contributor to

increased levels of carbon dioxide

that promote global warming.

• Ergonomic furniture

The work surface of the employee's

desk will include computer monitors

that install below the desk surface to

reduce eyestrain and glare. The

computer keyboards and mouse

trays will also offer features that

reduce repetitive strain injuries like

carpal tunnel syndrome. There are

desktops that change in height at the

touch of a button, and bookshelves

that rotate to provide easier access

to reference materials (Government

Executive, p. 59). 

• Private teaming space

Teaming space should be located in

an area that does not disturb fellow

office employees. Collaboration

among team members requires

territorial space. Teams need space

to call their own and for centralizing

team information and history.

Employees will also benefit from the

discipline-specific interaction,

learning and reinforcement that

transpires.

• Personal control over the

workspace

In a recent 1999 survey conducted by

the Building Owners and Managers

Association (BOMA) and the Urban

Land Institute (ULI) entitled, "What

Office Tenants Want," the net results

clearly show that most tenants want

control over their space temperature

and personal office environment

(Skylines Magazine, p. 1).

The changeover to allow employees

greater freedom in controlling their

workspace will be gradual but

progressive as we move into the new

millennium. The drivers of this

change in operations will be

demands by current and new

employees for a healthier and more

productive workspace and a

reduction in costs.

• Energy conservation

measures

The demand by customers and

communities to be socially

accountable to eliminate energy

waste and the pollution it causes,

and the focus on stakeholders to

reduce building operating costs will

provide an incentive to facility

managers to make their buildings

more energy efficient in the future.

Devices such as direct digital

controls help maintain the proper

balance between fresh and recycled

air, thus reducing the amount of

outside air that is heated and

humidified in the winter or cooled

and dehumidified in the summer. 

Other technologies used by owners

and managers to improve the

efficiency of heating ventilation and

air-conditioning (HVAC) systems

include displacement ventilation and

desiccant air systems. Displacement air allows air at ground level

vents to heat up naturally as it rises,

reducing heating costs (Respond,

K.M., p. 28). A desiccant air system

dehumidifies air prior to its
Appendix A: Discussions on Predictions Outlined in Part One

31

distribution through the HVAC

system. This allows cool air to flow

without an increase in humidity.

New lighting designs in buildings

will also reduce energy costs and

improve worker productivity.

Tomorrow’s energy savings will be

achieved in part by the design and

installation of lighting that gives

even greater energy savings and

ensures that the system is ideally

suited to the employee’s work 

tasks. 

• Plug and play systems

These systems offer organizations

added flexibility to change space

interiors to meet their unique needs.

This is accomplished by using a

combination of raised flooring and

boxes that contain electrical,

telecommunication and information

technologies service hookups.

Another benefit of this overall

system is that the raised flooring

can be used to transmit airflow to

the employees’ desks, providing

employees with the ability to control

ventilation and temperatures within

their space.

• Open space

The open office environment will

comprise a mixture of cubicles.

Most will be used for employee

workspaces, some for group meeting

areas, a few for large conference

rooms, others for small private areas

requiring quiet and a few private

offices. The open architecture will

also allow moves to be

accomplished more quickly and

economically.

Some open offices will have

boulevards. The free flowing

walkthrough between workspaces

will support informal learning and

provide a place where people can

interact socially with others using

the boulevard or with those sitting at

their workstations. A survey by the

Center for Workforce Development

revealed that as much as 70 percent

of employee knowledge is gained

through informal learning

(Bencivenga, D., p. 4).

• Acoustical performance

Employees who have difficulty in

concentrating, or require a

confidential environment may find it

uncomfortable to adjust to open

office space configurations that

have not effectively mitigated the

background noise. The noise

reduction designs and materials

used in buildings of today are unable

to meet the rigorous requirements of

the new open workspace designs of

tomorrow. New office furniture

systems will include better sound

absorbing materials, wall finishes

that reduce the deflection of sound

waves, and sound-masking

technology to electronically control

noise levels in the employees’

personal space. 

• Workspace customization

Employees will have the opportunity

to customize their workstations.

Basically, a set price will cover a

workstation, including employee

selection of different options such

as colors, material textures, seating,

task lighting, etc.

A-3. Facilities

• New buildings

Many buildings in the public and

private sector are dated and have

old technology that needs upgrading.

Experts agree that many office

buildings of today are incapable of

meeting the demands and

challenges of the future. 
Appendix A: Discussions on Predictions Outlined in Part One

32

Some experts suggest that, in some

cases, it may be more cost effective

to construct new office buildings.

However, sustainability

considerations are going to preclude

widespread reliance upon

demolition/replacement. 

Reasons for building new may

include the high costs to abate

hazardous substances in existing

structures, a building which is no

longer a viable economic asset, the

need for additional building space,

the opportunity to promote

innovative building designs and

technologies, the need for greater

revenue, and the requirement to

service unique customers.

• 24/7 Operations

In the future, organizations will move

operations to a 24-hour/7 days a

week (24/7) basis. Demands to

remain competitive coupled with

keeping pace with the Internet will

gradually increase the demand for

workforce planning to cover a 

24-hour a day period. At the same

time, many organizations are

beginning to consider the negative

social, physical and psychological

impact on employees of being

constantly "at work," either

physically or virtually.

• Retrofitted buildings

Retrofitted buildings do not require

the payment of premiums to satisfy

new building codes and can often be

renovated sustainably. The

processing and disposal of

construction waste is minimized.

There is also the benefit of having

advantageous site locations and

building heights that may no longer

exist because of new zoning

requirements.

• Leased Facilities

The dynamic and uncertain

environment of tomorrow will

encourage more organizations to

rely on short-term leases.

Organizations recognize that to

remain competitive in an

environment that is undergoing

constant change internally as well as

externally requires agility. This

flexibility must be timely, cost

effective, targeted, and successful,

or an organization may lose its

competitive posture. Even though

shorter-term leases will be more

expensive, the costs of missed

opportunities in the new millennium

are incalculable in comparison. 

• Building design

Reductions in middle managers and

flatter organizations are

compressing the building structure.

The hierarchical designs of the last

100 years will not meet the new

business leader management style

of the future. Future leadership

wants the capability to adapt quickly

to new services and products to

remain competitive.

• Disposable offices

Organizations in the future will have

the option of using a disposable

office (fully functional office space

that can be rented by the hour, the

day, the week, the month and the

year) arrangement when the need to

construct/lease everyday workplaces

becomes impractical. Organizations

can benefit by pilot testing different

office environments in the

disposable office at a fraction of the

cost than if they had to reconfigure

their existing offices. There is also

less disruption to rank and file

employees if the pilot proves

unsuccessful. Organizations will
Appendix A: Discussions on Predictions Outlined in Part One

33

use disposable offices for

operations that do not justify high

overhead costs. Costs to construct,

build-out and furnish conventional

office space are eliminated. Organizations that consist primarily of

small sales staffs or several consultants are ideal candidates for the

disposable office (Arenas, J. P., p. 30).

A-4. Building Security

The offices and the workspace of the

future will be safe. At the

government and private sector level,

incidents of mass destruction such

as those against the Alfred P.

Murrah Federal Building in

Oklahoma City and the World Trade

Building in New York City, have

energized facility managers to

acquire and install new security

technologies. Other similar

incidents of office building and

workplace crime have led realty

managers to develop security survey

models that detect threats against

office buildings and their occupants.

According to the Workplace Violence

Research Institute, violence in the

workplace costs employers

approximately $36 billion dollars

each year from losses in work

stoppages, tarnished reputations,

lower morale, and lawsuits alleging

negligence (Mosher, D., p. 24).

The security challenges of the

twenty-first century will not be easy.

Demands by corporate executives to

cut expenses, expectations by

customers to have comfortable and

flexible buildings and workspace,

and potential lawsuits, will continue

to pressure managers to look for

new and innovative technologies to

mitigate crime. Provided below are

security technologies that can

improve occupant and building

security.

• Biometrics

These devices will replace the

typical proximity reader for

controlling who enters and leaves

the building. 

• Digital video 

Digital pictures enable building

security to have global monitoring

and reporting. 

• Greater Bandwidth

Greater bandwidths will provide the

facility manager with faster

information to improve decision

making before dispatching security

personnel.

• Internet

Sophisticated Internet browsers can

provide managers with the

information and data required to

monitor and make decisions

regarding building security. 

• Radio Frequency

Identification (RFID)

Devices 

Statistics indicate that in-house

employee thefts are 15 times greater

than external thefts, and that 

75 percent of them go unnoticed by

management (Vergetis Lundin, B.L.,

p. 89). RFID technology can help

control thiefs. It is especially

effective when two or more

departments share equipment, and

in verifying the movement of

supplies and equipment leaving

warehousing facilities.

• Security surveys

Security surveys focus on the

location of the building, building

tenants, access and egress required

by building tenants, existing security

systems, crime statistics for the area,

building construction type, hours

worked by the tenants, and number
Appendix A: Discussions on Predictions Outlined in Part One

34

and types of outside deliveries.

• Smart cards

The use of these devices will control

ingress and egress to buildings and

the workspace. These cards

incorporate electronic technology by

using an embedded chip that

provides security officials with a

great deal of information on the card

user. Information such as the

employee’s picture, personal statistics and emergency information/

data can be embedded in the chip. 

B. Office Location

• Traditional settings

Experts believe that there will be a

shortage of labor over the next 

20 years. Many organizations are

now adopting a location strategy to

go where the knowledge workforce

is. The shortage and fierce

competition for the limited supply of

knowledge workers is pressuring

organizations to move to areas that

were once considered unacceptable. 

Sociologists believe that knowledge

workers will locate closer to the

center cities. Since this group is

mostly comprised of young people,

either single or married with no

children, the inner cities offer them

more activities, and provide cultural

learning. These workers also benefit

from attending higher learning

educational institutions within or

near the city and the flexibility of

mass transit systems that offer

freedom of movement within the city.

In addition, the close proximity of

their work to the inner city provides

these individuals with more free time

for other activities.

In addition, the need for good

transportation networks will play a

large role in formulating the

organization’s future location

strategy. Organizations will favor

locations where employees can

benefit from area mass transit

systems. The traffic gridlock that

plagues the nation's cities and

highways is stealing productive time

away from workers, making it more

difficult to attract new and retain

existing workers, and compromising

the quality of our air and

environment, while costing the

nation billions in new roads and road

repairs. In addition, some experts

believe that organizations will favor

locations that are close to airports

and other forms of commercial

transportation to provide better

services to their customers.

Regardless of the reasoning, owners,

developers and facility managers

must be smart about where they

locate future offices and the

workspace to assure improved

quality of life for workers and the

adjacent community. 

Furthermore, organizations will

consolidate buildings and functions

as an integral part of their location

strategy. Improvements in

organizational efficiency and

reductions in overhead costs are the

rationale for most consolidations.

For example, the demands of

rightsizing, downsizing, mergers,

and lower facility operating costs

are primary drivers for consolidating

building operations. Building

consolidations will also benefit the

organization by freeing up capital for
Appendix A: Discussions on Predictions Outlined in Part One

35

other core mission requirements,

promoting mobility initiatives for

workers, eliminating redundancy in

staff resources, and promoting

organizational efficiency by having

fellow organizations located in the

same building. 

• Alternative office

environments (AOE)

The workforce of the future wants

more choice, flexibility and freedom

from the traditional office

environment. The alternative office

environment (AOE) will satisfy these

demands and offer workers more

free time and reduced commuting

times. AOEs such as telework

centers, drop in centers, port sites

and satellite offices are excellent

solutions (options) for employees

who desire to work closer to home or

for employees who prefer to work

away from the office until local

traffic conditions are favorable

enough to allow them to reach their

assigned workplace. To reduce the

overhead costs associated with

these generic facilities, many

organizations are building or leasing

space in lower cost areas normally

found around the perimeter of the

city. 

The work-at-home strategy is similar

to AOEs because it is away from the

traditional office, and yet different

since it does not require the

organization to construct or lease

independent space. Employees are

encouraged to establish office

workspace in their personal

residences. Most organizations

supply the computer equipment and

software, printer, faxes, LAN, phone,

Internet access, and furniture. Some

organizations also pay for long

distance service, and a few will even

pay for electrical usage provided the

service is separately metered from

the main home. For more

information see GSA’s publication

on Office Space Use Review, Current

Practices and Emerging Trends,

September 1997.

C. Workforce

Generation Y represents

approximately 72 million people.

This is the future workforce. This

generation is more ethnically diverse

and interested in protecting the

environment; therefore, it is

important for facility professionals

to consider this when designing and

constructing office buildings and the

workspace of the future (Zemke,

Raines & Flilipczak). 

• Physically challenged

The future office and workspace will

be accessible and friendlier to the

physically challenged in the areas of

C-1. Diversity

• Age

Future organizations will get support

from three generations of workers.

Approximately 77 million baby

boomers (between the ages of 40 to

57) occupy most of the influential

positions within organizations and

companies. 

In comparison, there are

approximately 45 million Generation

Xers (between the ages of 23 and 34)

in the workforce. This group is

commonly referred to as the

knowledge workforce. 
Appendix A: Discussions on Predictions Outlined in Part One

36

physical, visual (sight and hearing)

and mental impairment. Facility

managers are eliminating physical

barriers at the workspace that

challenge the general public and

employees.

The Americans with Disabilities Act

(ADA), signed into law on July 26,

1990, prohibits discrimination based

on disability in employment,

programs and services provided in

Federal State and local

governments, and products and

services provided by the private

sector through commercial facilities.

ADA requires that organizations

make a good faith effort to eliminate

any barriers within reason. The Act

does not apply to commercial

enterprises such as manufacturing

plants and corporate offices that do

not routinely invite the general

public into organizational facilities.

It makes good business sense to

eliminate physical barriers. Experts

estimate that approximately 

54 million individuals in the U.S. are

physically challenged in one way or

another. These same individuals

have disposable incomes that total

about $175 billion. There are a

growing number of physically

challenged customers and employees that many organizations can

reach out to simply by improving

access to the building or by providing better navigational assistance

within the building. These specially

challenged citizens will not patronize or inquire about career opportunities within organizations that are

not sensitive to their special needs. 

The facility manager will need a

thorough knowledge of ADA, and is

strongly cautioned to make sure that

the requirements of ADA are fully

assessed prior to finalizing plans to

construct, renovate, modernize or

alter any office and workspace.

Application of the Americans

Disabilities Act Accessibility

Guidelines (ADAAG) is an essential

part of conducting this assessment.

The guidelines provide an

architectural blueprint of

requirements that satisfy the

purpose and intent of the ADA.

• Retirees

Shortages among the knowledge

workforce will encourage

organizations of the future to hire

retired workers and increase the age

of retirement for existing workers.

Organizations must prepare

themselves to offer older workers

the same amenities that appeal to

younger workers, like part-time work,

flexible work arrangements, flexible

hours and transit subsidies, plus

certain amenities that are

specifically targeted to the aging

population such as on-site medical

clinics, elderly care, and retreat or

meditation rooms. 

C-2. Availability

According to experts, the greatest

challenge for facility executives in

the twenty-first century is to keep

and retain key personnel. A study

conducted by McKinsey and

Company indicates that the supply

of qualified real estate professionals

will decline by 15 percent over the

next 15 years, while the demand for

these professionals will increase by

approximately 25 percent over the

same period (Grossman, R. J.).

• Global competition

Global competition will contribute to

the shortage of qualified personnel

in the new millennium. The

expansion of the Internet and the

availability of low-cost, high-tech

electronic communication devices
Appendix A: Discussions on Predictions Outlined in Part One

37

and infrastructures makes it

possible for employees to work

internationally.

• Abundance of investment

capital

The abundance of investment capital

will also make it difficult to hire

qualified realty professionals. The

number of individuals that no longer

desire the trappings of the

traditional corporate career ladder

positions is increasing. This group’s

members often favors establishing

or joining new technology start-ups,

fueled by record level prices for

technology stocks.

• Productive workplace

Organizations that do not provide

workers with an efficient and productive workplace will also experience a difficult time in filling career

vacancies. A survey conducted by

the American Society of Interior

Designers suggests that 41 percent

of job applicants see the office

environment as a key consideration

in choosing for whom to work

(Gorman, M. T., p. 21). To further

illustrate this point, Table B shows

the importance of the workplace to

hiring and retaining employees.

Table B: Workplace Importance to Employees

89%

57%

11%

of Facility executives view the workplace as

an asset to recruit and retain employees

of Facility executives have their facility

accessible to mass transit systems

of Facility executives say that an employee

has quit within the past two-years over

dissatisfaction with the workplace.

Source: Reel Grobman & Associates

Most organizations are beginning to

take action to attract employees in

all fields, including the area of

facility management. For example,

some organizations are creating

"assistant to" jobs to backfill

executive level positions. Other

organizations are increasing the

ranks of the physically challenged.

Organizations such as Booz, Allen

and Hamilton; Microsoft; Ford Motor;

Honeywell and others are

aggressively seeking disabled

employees. For example, Microsoft

has instituted a program, "Able to

Work," that is a consortium of 22

businesses that are actively seeking

ways to hire the best and brightest of

the disabled workforce. The National

Disability Council reports that

organization’s requests for physically

challenged workers has grown by 50

percent (Williams, J., p. 66). 

Some organizations are also turning

to the Internet for assistance to hire

workers. Use of the Internet to

canvass potential workers has
Appendix A: Discussions on Predictions Outlined in Part One

38

jumped to 64 percent of all those

firms surveyed in 1997 compared to

38 percent just two years ago. The

Internet allows organizations to

attract a larger cross-section of

employees to fill the increasing

demand for professionals.

The Federal Government will also

face a shortage of qualified

professionals in the future. In fact,

experts believe that Federal

agencies will experience more

difficulty in filling career positions

than the private sector. College

graduates and professionals looking

for careers are less inclined to work

for the government than the private

sector. The era of downsizing, and

the perceptions of scandals and

government inefficiency have

undermined the effectiveness of

agencies to attract the best and

brightest for job vacancies. (Light, P.,

p. 17).

The intense competition with the

private sector for highly qualified

workers also places the government

sector at a disadvantage in hiring

the best and brightest. Even though

Federal agency personnel organizations are being replaced by more

flexible change-oriented systems,

private sector employment practices

can surpass these by offering

signing bonuses, higher starting

salaries, better opportunities for

growth and learning, and a flexible

personnel system that rewards

innovation, creativity and performance through frequent promotions

(Light, P., p. 17).

D. Support Services

• Workplace amenities

Providing employee amenities at the

workplace will continue to expand in

the future, as these are viewed as

"quality of life." Organizations

recognize that offering amenities is

a small expense in comparison to

the extraordinary benefits received,

such as improved employee

productivity, better morale among

workers and a positive image with

customers and the community.

• Elder care

One area that will receive more

attention in the future is elder care.

Good health and advances in medical

technology are helping family

members to live longer lives. As a

result, a growing number of workers

have long-term commitments to care

for aging family members.

Organizations of the future that

expect to attract and retain workers

will offer elder care as a part of their

employee benefits package.

Chart A displays the types of

amenities that facility managers from

selected Fortune 500 Companies are

offering to employees at the

workplace and the frequency of

offering.
Appendix A: Discussions on Predictions Outlined in Part One

39

• Employee service networks

In the future, organizations will

arrange for services such as

employee home repairs and home

cleaning. The company benefits by

having a focused, less agitated and

more productive worker. Equally, the

employee benefits by having more

time for family and other activities.

Chart A: Amenities in the Workplace

E. Organizational Operations

• Global expansion

No longer are organizations looking

at buildings and space at the local or

even national level. Organizations

are now multi-national with property,

staffing and products located

throughout the world. Global

operations are now even more

complicated and complex than ever.

Facility managers must recognize

and comply with regulations and

statutes concerning housing

employees, address unique cultural

diversity issues, and provide

effective security measures.

• Corporate Infrastructure

Resource (CIR)

Management

It is important that future real estate

organizations have the correct

infrastructures in place to service

their customers. The correct CIR

strategy will ensure that the

organization is equipped to become

a successful global competitor. Too

much CIR can hurt an organization

by reducing its competitiveness, and

too little can be detrimental to the

support of the core/mission

requirements. For more information

on CIR, go to IDRC’s website:

www.sitenet.com/idrcnet.

Care SvcsFinancial PlanningTravel SvcsDry CleaningCar WashFree ParkingChildcareATMsConvenience SvcsFree FoodVendingSnack BarsCafeteriasLoungesFitness Centers

Source: 1999 Survey of Workplace Productivity Consortium members

Sample: N=25 (selected Fortune 500 Companies)

16

40 48 40

16

84

44

92

52

32

96 96 96

32

92

Percent
Appendix A: Discussions on Predictions Outlined in Part One

40

The concept of CIR refers to:

• Management integration of noncore functions (Human

Resources, Information

Technology and Corporate Real

Estate) to add value and reduce

costs in organizations.

• A new approach to create and

sustain capabilities for creating

business plans of the

organization.

• New process and organization

models that align and integrate

the management of workspace to

increase productivity and lower

costs.

Reasons for implementing CIR

include:

• Quicker response to satisfying

organizational needs

• Lower product and service costs

• Improved use of limited resources

• Enhanced levels in services

delivered

• Better quality in products and

services

• Ability to attract and retain best

and brightest employees

• Work outsourced

The transfer from inhouse to

outsourced service providers will

continue, but slowly. Of course,

there will be some organizations that

continue to retain their facility

operations in-house. Those that

remain inhouse believe that they

derive benefits of lower operating

costs, higher productivity, more

timely delivery of services, greater

flexibility to implement future

changes, and a corporate image of

support for employees, customers

and the local community.

The focus on containment of costs

in facility operations has become the

primary driver of many organizations

to use outsource providers.

Organizations no longer want to

carry overhead staffing costs when

services can be accessed only on an

as needed basis, especially when

the results are better than your own

staff can provide.

The "all in" service is being used by

organizations like General Motors,

Dupont, Citicorp, Lucent Technologies, Bristol-Myers Squibb, and

several others who have adopted

and implemented this organizational

model (Westfall, S. L.). The all in

service approach is one-stop

shopping for those employees’

needs connected with work. 

F. Technology

• Data cabling

According to Mr. Daren Hornig,

cofounder and executive vice

president of On-site Access, a

provider of telecommunication

services in the New York area, "Every

building will need to be rewired in

the next five years." (Miller, C., p 18). 

If building owners expect to retain

quality clients, offices must be

compatible with available

technology. For example,

telecommunication cable

infrastructures in buildings will carry
Appendix A: Discussions on Predictions Outlined in Part One

41

digital subscriber line (DSL) for

digital telephone service, e-mail and

direct access to the Internet. Using

DSL's eliminates delays found in

dial-up systems and provides higher

transmission speeds than modems.

DSL’s will enhance tenant access to

desktop video, data conferencing

and other interactive multimedia

applications.

In addition, new and retrofitted

buildings of the future will benefit

from higher speed copper wiring,

such as the Category 6 and 7 next

generation cabling, and fiber-optic

cabling. This next generation

cabling can support gigabyte

applications in information

technology. The fiber-optic cable will

support high-bandwidth such as

broadband technology. This

technology will enable realty

professionals to download more

information, provide faster loading of

data and information and generate

better images, including virtual ones

over the Internet. 

Even though the new generation of

cabling will increase building owner

costs, it is probably not a prudent

move to invest in less expensive

technologies, especially if the owner

and facility manager is serious about

maximizing the use of the building(s)

and getting the most value from the

investment. (Peri, F., p 24). Most

telecommunication providers believe

that building owners can recover

their initial investment in high-speed

broadband telecommunication

services within a year.

• Internet

Since the early 1990's when the

Internet gained popularity with

businesses, it has changed the way

workers interact with office

buildings and the workplace. The

Internet has enabled most managers

and workers to free themselves from

the traditional confines and

restrictions of the traditional office

building. No longer do employees

require an assigned office, nor do

they have to work prescribed hours.

The workers’ productivity and

quality of life is improved since they

are not sitting in traffic congestion

and do not have to take chances

during bad weather conditions.

Workers also have the opportunity to

spend more quality time with family,

friends, and other activities. The

Internet is also an electronic source

of global information and data used

to perform various analyses and

research projects efficiently. 

Another example where Internet

technology is changing the way real

property is operated and managed is

seen in the area of e-commerce.

Specifically, there are four activities

that will see the benefits of 

e-commerce: purchasing, communications, real estate transactions and

project management (Piper, J., p. 36). 

Purchasing goods and services

using e-commerce will reduce

procurement costs. So called spot

purchases that require purchase

orders will be virtually eliminated

and replaced by on-line credit card

purchases. On-line purchases

eliminate the costs and delays of

processing paperwork for the

purchase order. On-line

procurement also provides real time

availability and pricing data on the

products and services offered. In

addition, because on-line orders are

normally acquired over shorter

procurement cycles and reach

suppliers with large inventories,

facility managers do not need large

inventories of spare parts. This has

two major benefits. First, the
Appendix A: Discussions on Predictions Outlined in Part One

42

amount of expensive space to house

inventories is reduced, and the cost

to maintain and track inventory is

practically eliminated. Secondly,

facility managers no longer need to

discard outdated supplies and

materials. They are able to take

advantage of the latest in innovation

and design in equipment parts and

spares.

Communications through the

Internet will improve the timeliness

and accuracy in the flow of

information and data on-line.

Facility managers using e-mail can

keep in continuous contact with their

customers. Progress reports, orders

for repairs and work schedules can

be electronically transmitted across

town or the world in a matter of

seconds. E-commerce can also

provide customers with advance

warnings of potential problems so

that the information can be used to

fix the same problem at other sites

the customer occupies. 

Real estate transactions are

gradually replacing conventional

ways of marketing office properties

and space. In just 6 years, customer

use of the Internet has climbed to

over 300 million since 1993, and is

expected to reach 600 million in 2004

and 1 billion worldwide by the year

2010 (Inman). The continued growth

in the number of realty transactions

performed on-line is attributed to

customers’ demand for cost

effective, efficient, and real time

information and data. The

proliferation of inexpensive and

efficient personal computers and

data transfer technology in

businesses and homes has made it

easy for the global community to

access information at any time, and

any place. For example, in the area

of real estate, the power of the

Internet provides customers with

details on building floorplates/

floorplans, photos of the property,

on-line tours of the inside and

outside of the property, maps on

where the property is located, site

plans and elevations, demographics

on the surrounding area, financial

information on property acquisition

cost, purchase price, leasing

information, rent, taxes, utilities, a

contact person and contact

information, and any other pertinent

information. The availability of

Internet technology is also

increasing customer demand for

integrated on-line realty services.

Through strategic alliances and

Internet partnerships, Internet realty

providers will offer a complete line of

realty services on line. Services like

advertising and selling of large and

small property portfolios will be

combined with services such as life

insurance, property inspections,

mortgage services, equity analysis,

title searches, and other realty

closing services. Combining these

and other realty services for certified

repairs, remodeling specialists, and

suppliers of realty materials and

equipment is significantly reducing

the time and resources that would be

required if the customers had to

conduct their own search and secure

these services themselves.

Project management will benefit

from e-commerce. Many costly

delays in construction projects are

in transmitting documents and

related changes, and obtaining

approvals. Using the Internet for

this purpose is timely and cheap.

Documents can be viewed and

approved on-line by numerous

individuals at the same time,

whether across the street or on the

other side of the world. Results

suggest that average savings of 1 to
Appendix A: Discussions on Predictions Outlined in Part One

43

3 percent of the total project cost

can be obtained (Piper, J., p. 36).

• Intelligent buildings

The intelligent/smart approach and

interoperability will be the standard

for office buildings and workspace

design in the new millennium. These

buildings will provide occupants with

working environments that sustain

competitiveness in today's global

markets. 

Topping the list of intelligent

building items are six components:

security, lighting, fire and safety

systems, energy management, power

transmission, and environmental

control (Caloz, J.W., p. 53). The

integrated design approach will

meet the challenges of flexible work

environments that vary working

conditions while controlling energy

costs and being good stewards of

the earth’s environment. This is

successfully accomplished by having

building systems work together

seamlessly rather than independently. For example, systems like raised

flooring, flexible lighting, and plug

and play options promote synergy in

creating cost effective and adaptable systems that respond immediately to an increasing environment

of organizational change.

Smart building systems will not rely

on proprietary software or a single

vendor's products. This benefit

releases the buyer from having to

transact business with a single

vendor that supplies those specific

goods and services. The flexibility

minimizes the financial burden on

the buyer since there is no need to

buy a complete replacement system

if one or several components go bad,

or if the vendor is no longer in

business.

• Power systems

Not having an efficient, flexible and

reliable power arrangement in the

building can cause the customers'

workplace to experience recurring

problems such as equipment downtime, systems failures, lost data, or

corrupt data. It is believed that as

much as 45 percent of data loss and

data corruption is attributed to

inefficient power systems. 

In addition, it is imperative that

before customers install new

technology and systems that they

notify the facility manager. Using

this information, the facility manager

can retrofit existing buildings and

design new buildings that provide

power configurations that will

support the demand and change in

customer electronics.

Power backups are also becoming

commonplace in more buildings as

the demand for more sophisticated

telecommunication networks and

dollars invested in those networks

increase. 

• Wireless devices

Space limitations on where the

workspace is located will disappear

and workers will enjoy more

freedom. In addition, the expense,

time, mess, and loss of worker

productivity to restring cable

through the workspace will no longer

be a problem for either the facility

manager or tenant. 

A drawback to using wireless

devices is the limitation on the

distance within a building that the

technology can efficiency operate.

Development of new buildings will

have to be done with an awareness

of the metals used in construction.

Many metals that are not shielded
Appendix A: Discussions on Predictions Outlined in Part One

44

G. Real Estate Considerations

G-1. Demand

Many areas across the nation

continue to experience a shortage 

of office space. Some predictions

suggest that office construction 

will drop down to more of an

"acceptable" growth ranging from 

2 to 3 percent per quarter. There also

appears to be a consensus that the

incredible gains that were experienced in 1997 and 1998 of 4.0 percent

and 4.3 percent respectively in the

growth of new office properties will

not carry forward into the future

(Salimando, J., p. 54). 

G-2. Financing mechanisms

• Public/private partnerships

accepted

The benefits of the public/private

partnership arrangements are many.

New government office buildings are

constructed with no increase in

annual budgets, private sector

expertise is available to design and

construct the buildings and the

government is able to respond to

customer demands for better space,

support improvements in worker

productivity, lower energy costs and

reduce environmental pollution.

• Office construction 

The practice of financing at 95 to 

100 percent of real property value is

over. Instead, the developer will be

required to fund at least 50 percent

of the cost of office construction up

front, and be able to guarantee

leasing and completion of the

project (Outlook, p. 14). 

H. Regulatory Impacts

• Deregulation of utilities

The deregulation of electric utilities

will present a new opportunity, yet

challenge the real estate community

in the new millennium. Consumers

will now have a choice of who

provides their utilities. 

In 1999, 24 states already have

legislation that deregulates the

energy market. By 2004, it is

estimated that more than half of the

U.S. population will be able to

choose their energy providers

(Tagliafeere, L., p. 39). 

There are cost savings to be found in

energy deregulation; however, the

facility manager faces new

responsibilities that previously fell

to the state regulating commissions.

The facility manager should be a

knowledgeable shopper when

comparing various services. The

facility manager should also perform

an energy audit to gain a full

understanding of the energy

can bounce a wireless signal, and a

distorted line of sight within a

building can interrupt the 

signal.
Appendix A: Discussions on Predictions Outlined in Part One

45

requirements of the facility. This will

allow him or her to better match the

facility power requirements with the

energy provider. 

Aggregating the power requirements

of several buildings in a particular

area or a campus setting is another

option that facility managers will

use to reduce their future energy

costs. If an organization can

combine facilities having a lower

power load factor with those with a

higher load, they can reduce the

overall energy costs for the group of

facilities. For example, in the State

of Pennsylvania, GSA was able to

realize $5 million in cost avoidance

by awarding aggregated power

contracts for 27 federal activities

(Tagliafeere, L. p. 64). 

• Greening

The Federal Government is

aggressively promoting greener

working environments for the future.

In response to the President’s

Executive Order 13123, Greening the

Government through Efficient Energy

Management, Federal agencies will

reduce the emissions of greenhouse

gases in their building inventories by

30 percent in 2010 when compared to

the 1990's baseline. 

The General Services

Administration (GSA) is sponsoring

the "Planet GSA" program. The

program encourages Federal

agencies to build, buy, drive, manage

and save green. GSA is accomplishing this by providing agencies

with space, products, vehicles,

services, policies and technology

that provides and supports the

greening of the planet. Accomplishments in this area include:

• Reducing paper use

• Offering Energy Star® office

products to agencies

• Offering reformulated chemical

products

• Recycling office waste

• Using office supplies made from

recycled materials

• Utilizing "green" techniques to

construct and modernize

buildings

• Disposing of buildings using

sustainable principles

• Offering alternative-fuel vehicles

to agencies

• Teleworking

• Saving energy

• New leasing procedures

At the State level, for example, the

Governor of Pennsylvania

established the "Governor’s Green

Government Council" to facilitate

the incorporation and deployment of

greening across agency

jurisdictions. The government will

construct its future office buildings

using green technology. 

International governments will also

actively promote greener workplaces

in the future. For example, the Dutch

government has the National

Environmental Policy Plan. The plan

improves energy efficiency in new

and renovated buildings, and

increases the use and recycling of

construction and demolition waste.

• National Energy Policy

As a part of Executive Order 13123,

Federal agencies will reduce energy

use by 30 percent in government

buildings by year 2005 and 35 percent

by year 2010. Federal agencies will

focus on the installation of efficient

lighting systems, as well as boilers

and cooling systems; improving

building insulation; and expanding
Appendix A: Discussions on Predictions Outlined in Part One

46

the use of renewable energy

technologies.

Renewable sources of energy, such

as wind, sun, biomass, and

geothermal, will also present new

opportunities to owners and facility

managers of office buildings to

reduce future energy costs and

preserve the environment. By 2010,

the Federal government wants to see

7.5 percent of electricity generated

through renewable energy sources. 

The Department of Energy (DOE)

and the Environmental Protection

Agency (EPA) have implemented

their "Energy Star®" program, which

encourages building owners and

facility managers to improve energy

efficiency and reduce waste. The

program identifies appliances,

lighting and office equipment that

meet certain energy efficiency

guidelines. Recently DOE and EPA

expanded the program to recognize

roofing products that exceed solar

reflectance levels without

compromising either quality or

performance. 

DOE has funded a $1 million

research project for the Air

Conditioning and Refrigeration

Technology Institute (Raiford, R., p.

45). The project is responsible for

developing high-energy efficient

systems and services for new and

retrofitted buildings. The Institute's

research will focus on the design of

flexible HVAC distribution systems

and a review of building simulation

and design tools.

• Transportation

Experts believe that highway traffic

congestion from single-occupancy

vehicles could increase by over 

61 percent in the next 20 years,

costing the economy approximately

$39 billion annually.

The collaborative efforts of Federal,

State and local governments and the
Appendix A: Discussions on Predictions Outlined in Part One

47

private sector will continue to work

toward the common goal of reducing

air pollution and eliminating traffic

congestion attributed to employees

that commute to work in their

vehicles. Efforts by the Federal

Government to accomplish this goal

are found in the Federal Employees

Clean Air Incentives Act and the

Transportation Equity Act for the 21st

Century (TEA 21), discussed below.

In 1993, the Congress passed the

Federal Employees Clean Air

Incentives Act to improve air quality

and to reduce traffic congestion.

Passage of this Act authorized

Federal Agencies to establish

programs that encourage employees

to commute to work by means other

than single-occupancy vehicles.

Another piece of landmark

legislation that encourages

employees to commute to work

using public transportation is 

TEA-21. This legislation was signed

in 1998, and amends the Internal

Revenue Service Code 26 USC 132(f)

by allowing public and private sector

employers to provide tax-free transportation fringe benefits in addition

to present employee compensation,

or in lieu of compensation. TEA-21

also provides a "parking cash-out

program" where employees can

either cash out their employersponsored parking, or receive taxfree transit or vanpool compensation

of up to $65 per month (as of

October 1, 2000).

On April 21, 2000, the President

signed an Executive Order, Greening

the Government through Federal Fleet

and Transportation Efficiency. The

order directs Federal agencies to

reduce their annual petroleum consumption by 20 percent by the year

2005. Using alternative fuel vehicles

and re-refined motor oils will be

instrumental in meeting this goal.
Appendix B:

48

THE OFFICE OF REAL

PROPERTY,

EVALUATION AND

OUTREACH DIVISION, with the

assistance of a Contractor,

Chesapeake Consulting, Inc., of

Alexandria, Virginia, prepared this

report. Through our combined

efforts, we spoke to 38 experts from

the public and private sector,

performed a literature search to

identify the latest information and

data on office buildings and new

workspace of the future, searched

virtual (Internet) and actual

communication links, and canvassed

ideas from senior level management,

colleagues and other diverse

resources. The following matrix

shows the predictions that were

made by the respondents and the

frequency of being selected.

Respondent and 

Predictions Matrix

Predictions 

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 

A Physical Environment 

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 

A-1 Use of sustainable design/materials ■ ■

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 

A-2 Interior Office Environment

Flexible furniture ■

Natural light ■■■

Ergonomic furniture ■

Private teaming space

Personal control over workspace

Energy conservation measures ■

Plug and play systems

Open space

Acoustical performance

Workspace customization ■

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 

A-3 Facilities

New/retrofitted buildings

Twenty-four seven operations (rolled into new bldgs)

Leased facilities ■

Building design ■

Disposable offices

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 

A-4 Building Security

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 

B Office Location

Site selections ■ ■

Transportation strategies (rolled into site selections) ■

Building consolidations (rolled into site selections) ■ ■

Alternative office environments ■■■■ ■■

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 

C Workforce

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 

C-1 Diversity

Age ■ ■

Physically challenged ■

Retirees ■■■

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 

C-2 Availability ■

Global competition

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 

D Support Services

Workplace amenities

Employee service networks ■ ■

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 

E Organizational Operations

Less centralize authority ■ ■

Outsourcing

CIR management

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 

F Technology

Integrated new technologies into bldg designs ■ ■

E-Commerce (rolled into new technologies)

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 

G Real Estate Considerations

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 

G-1 Demand ■■■

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 

G-2 Financing mechanisms

Public/private partnerships 

Wall Street financing ■■■ ■

Office construction financing ■

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 

H Regulatory Impacts ■■ ■

Greening

Respondents

Architectural firmCommercial property provider (#1)Commercial property provider (#2)Commercial property provider (#3)Commercial property provider (#4)Commercial property provider (#5)Consulting group (#1)
49

Appendix B: Respondent and Predictions Matrix

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■■ ■ ■■ ■■■■ ■ ■ ■ ■■ ■■

■■ ■ ■ ■■■ ■ ■■ ■ ■ ■■

Consulting group (#2)Consulting group (#3)Designer/ manufacturer of office furnitureElectronic banking institutionFuturist (#1)Futurist (#2)Government service organization (#1)Government service organization (#2)Government service organization (#3)Government service organization (#4)Government service organization (#5)Government service organization (#6)Government service organization (#7)Government service organization (#8)Government service organization (#9)International organization (#1)International organization (#2)Manufacturer of building controlsManufacturer/designer of communication technologyManufacturer of electronic equipmentManufacturer of electrical and equipment controlsManufacturer of facility controlsManufacturer of information technologyNetworking companyREIT companyService organizationUniversity (#1)University (#2)University (#3)University (#4)University (#5)
50
51

Appendix C:

Office Space: The office building

represents an average facility in that

the coefficient for age and class are

weighted averages. The national

forecast includes only office

buildings within the continental U.S.

The building square footage is

expressed in rentable square feet

(rsf).

Office Employment: The demand

for office space comes from

employment statistics within certain

sectors of the economy. The

majority of jobs housed in office

space are from the finance,

insurance, real estate and service

sectors of the economy. Service will

continue to be the fastest growing

sector over the next decade,

increasing approximately 29 percent.

Within the service sector, the fastest

growth should be in computerrelated companies and information

technology.

Office Completions: The office or

space completions reflect the square

footage of actual office space

completed or new space under

construction scheduled for

completion during a specific period.

The inventory of completed space

includes office buildings that exceed

20,000 or 30,000 rsf. 

Vacancy Rates: The vacancy rate

comes from vacant square feet

divided by the building square feet.

The rates cover mostly competitively

rented buildings in the 54 metropolitan areas. The vacancy numbers

are based on 20-year old historic

data provided by the Building

Owners and Managers Association

(BOMA) and an international realty

company.

In the model, the key relationship is

between vacancy rates and rent

changes. The structural rate of

THE FOLLOWING

DEFINITIONS ARE PROVIDED for the variables in

the econometric model.

Torto Wheaton

Econometric Model
52

vacancy describes the vacancy-rent

linkage. This represents the vacancy

level where rents are in equilibrium.

For example, vacancy rates that go

above this level will cause rental

rates to fall.

Absorption Rates: The absorption

rate represents the net change in

total competitively leased square

feet from one period to the next. It is

not gross absorption, or a measure

of total leasing activity, which is

more a measure of tenant turnover or

mobility rather than market demand.

Absorption, as used in this model,

reflects the change in space

demanded when such space is

available.

In the model, competitive absorption

(net) represents the amount of new

space brought into a market over a

period of time minus the change in

vacant space over the same period.

The econometric model also

incorporates an accounting equation

and a number of behavioral or

statistical relationships. The

predominant factors that impact the

demand for office space include the

economy, office employment, rental

rates and availability. For example:

• The office employment in relation

to the amount of total occupied

space strongly affects the

absorption rate.

• As the price of space declines

and consumption increases,

absorption per office employee is

higher in slack markets.

• Absorption can be constrained in

tight markets by an inadequate

supply of space, resulting in an

underestimation of the true

demand for office space.

• The expectations regarding the

rate of economic growth affect

the demand for space per

employee.

Moreover, on the supply side, there

is a correlation between completions

of new competitive space and

market conditions, including vacancy

rates, rents, space absorption and

overall economic growth. Interest

rates and other financial market

conditions do not appear to impact

the level of building activity. 

The forecasts produced by the

model utilize the following process:

• The employment forecasts and

projected changes in the

employment structure derive the

future of office employment.

• Given the current stock of office

space (both competitive and

single tenant), together with

future office employment and

current vacancy rates, the

equation is able to forecast total

market absorption.

• A competitive completion minus

net absorption produces changes

in vacant space, from which new

vacancy rates are determined for

competitive space.

• Market surveys of office space

reveal the completions of

competitive space over the first

forecast year. Beyond that, data

on vacancy rates, net absorption

and employment growth provides

predictions on future competitive

completions.

• The historical movements and the

relationship between vacancy

rates and office rents provide the

basis for the future value of

vacancy and office rents.
Appendix D:

53

Exhibit 1 National Forecast, Office Real Estate 1999 - 2009

Year Rentable Sq. Employment Employment Rental Rates Vacancy Rate New Office Net 

Ft. (1,000) (1,000) Growth(%) ($/RSF) (%) Completions Absorption

(RSF x 1,000) (RSF x 1,000)

1999 2,401,772 11,154 3.9 $23.02 10.6 86,781 35,602

2000 2,502,956 11,353 1.8 $24.17 11.6 101,185 66,460

2001 2,600,207 11,620 2.3 $24.93 12.4 97,251 63,788

2002 2,694,704 11,875 2.2 $25.38 13.2 94,497 62,883

2003 2,784,599 12,128 2.2 $25.60 13.8 89,895 61,236

2004 2,867,988 12,386 2.1 $25.69 14.2 83,389 60,350

2005 2,943,967 12,651 2.2 $25.73 14.4 75,979 59,577

2006 3,012,632 12,917 2.1 $25.80 14.4 68,665 58,398

2007 3,074,771 13,184 2.0 $25.94 14.3 62,139 56,859

2008 3,131,562 13,448 2.0 $26.18 14.1 56,792 54,905

2009 3,182,353 13,717 2.0 $26.26 14.1 51,810 49,856

Source: Torto Wheaton Research

Exhibit 2 Atlanta, GA Forecast, Office Real Estate 1999 - 2009

Year Rentable Sq. Employment Employment Rental Rates Vacancy Rate New Office 

Ft. (1,000) (1,000) Growth(%) ($/RSF) (%) Completions

(RSF x 1,000)

1999 111,572 497 6.2% $19.05 9.9 6,428

2000 118,292 507 2.2% $20.42 10.9 6,720

2001 124,924 524 3.2% $20.84 12.3 6,632

2002 131,054 540 3.0% $20.96 12.9 6,131

2003 136,462 556 3.0% $21.13 12.9 5,408

2004 141,443 573 3.0% $21.34 12.9 4,981

2005 146,151 590 3.0% $21.57 12.8 4,707

2006 150,629 608 3.0% $21.84 12.7 4,478

2007 154,921 627 3.2% $22.20 12.4 4,292

2008 159,098 647 3.2% $22.66 12.1 4,177

2009 163,238 667 3.1% $23.22 11.7 4,140

Source: Torto Wheaton Research

Exhibits for Top 10 Growing 

U.S. Commercial Realty Markets 

And National Forecast
Appendix D: Exhibits for Top 10 Growing U.S. Commercial Realty Markets and National Forecast

54

Exhibit 3 Boston, MA Forecast, Office Real Estate 1999 - 2009

Year Rentable Sq. Employment Employment Rental Rates Vacancy Rate New Office 

Ft. (1,000) (1,000) Growth(%) ($/RSF) (%) Completions

(RSF x 1,000)

1999 138,701 656 3.6% $24.01 7.4 4,134

2000 143,405 668 1.8% $24.58 9.1 4,704

2001 149,026 682 2.1% $24.72 11 5,622

2002 155,099 696 1.9% $24.47 12.7 6,072

2003 160,928 708 1.8% $23.92 13.9 5,829

2004 166,070 720 1.6% $23.24 14.5 5,142

2005 170,250 731 1.6% $22.59 14.4 4,180

2006 173,396 742 1.6% $22.12 13.9 3,146

2007 175,632 753 1.5% $21.91 13.1 2,236

2008 177,209 764 1.4% $22.00 12.2 1,576

2009 178,428 776 1.6% $22.39 11.4 1,220

Source: Torto Wheaton Research

Exhibit 4 New York, NY Forecast, Office Real Estate 1999 - 2009

Year Rentable Sq. Employment Employment Rental Rates Vacancy Rate New Office 

Ft. (1,000) (1,000) Growth(%) ($/RSF) (%) Completions

(RSF x 1,000)

1999 353,878 1,161 3.3% $35.48 5.0 1,627

2000 357,252 1,169 0.6% $39.91 4.5 3,374

2001 364,692 1,183 1.2% $43.14 6.2 7,440

2002 372,314 1,196 1.1% $44.48 8.9 7,621

2003 380,159 1,207 1.0% $43.24 11.9 7,845

2004 386,960 1,217 0.7% $39.96 13.6 6,800

2005 391,832 1,225 0.7% $36.25 14.6 4,873

2006 394,446 1,233 0.6% $33.66 14.6 2,613

2007 395,562 1,240 0.6% $32.42 13.9 1,117

2008 396,008 1,247 0.6% $32.92 12.7 446

2009 396,452 1,254 0.6% $34.95 11.7 445

Source: Torto Wheaton Research
Appendix D: Exhibits for Top 10 Growing U.S. Commercial Realty Markets and National Forecast

55

Exhibit 5 Orlando, FL Forecast, Office Real Estate 1999 - 2009

Year Rentable Sq. Employment Employment Rental Rates Vacancy Rate New Office 

Ft. (1,000) (1,000) Growth(%) ($/RSF) (%) Completions

(RSF x 1,000)

1999 24,049 188 6.0% $19.16 11.7 3,072

2000 26,825 193 2.7% $19.14 16.9 2,776

2001 29,089 198 2.6% $18.89 19.4 2,265

2002 30,640 203 2.7% $18.57 19.7 1,550

2003 31,585 209 2.8% $18.28 19.2 946

2004 32,081 215 2.8% $18.14 18.0 496

2005 32,325 221 2.9% $18.23 16.2 244

2006 32,527 228 3.0% $18.57 14.4 202

2007 32,858 235 3.0% $19.11 13.0 331

2008 33,407 242 3.1% $19.78 12.3 549

2009 34,177 250 3.1% $20.48 12.1 770

Source: Torto Wheaton Research

Exhibit 6 Phoenix, AZ Forecast, Office Real Estate 1999 - 2009

Year Rentable Sq. Employment Employment Rental Rates Vacancy Rate New Office 

Ft. (1,000) (1,000) Growth(%) ($/RSF) (%) Completions

(RSF x 1,000)

1999 52,006 335 1.9% $19.99 14.9 4,679

2000 55,345 349 4.3% $21.12 14.2 3,339

2001 58,927 365 4.4% $21.96 13.5 3,582

2002 62,420 380 4.1% $22.72 13.8 3,493

2003 65,983 396 4.0% $23.37 14.3 3,562

2004 69,371 412 4.0% $23.92 14.3 3,389

2005 72,638 429 4.3% $24.45 14.0 3,267

2006 75,787 447 4.0% $24.98 13.8 3,149

2007 78,809 466 4.1% $25.55 13.6 3,021

2008 81,727 485 4.1% $26.16 13.2 2,918

2009 84,578 505 4.3% $26.84 12.8 2,852

Source: Torto Wheaton Research
Appendix D: Exhibits for Top 10 Growing U.S. Commercial Realty Markets and National Forecast

56

Exhibit 7 San Diego, CA Forecast, Office Real Estate 1999 - 2009

Year Rentable Sq. Employment Employment Rental Rates Vacancy Rate New Office 

Ft. (1,000) (1,000) Growth(%) ($/RSF) (%) Completions

(RSF x 1,000)

1999 43,806 236 2.9% $20.79 9.6 1,892

2000 45,769 243 3.1% $21.99 8.6 1,964

2001 48,086 252 3.6% $22.89 8.8 2,317

2002 50,445 260 3.5% $23.81 9.2 2,358

2003 52,785 269 3.4% $24.61 9.6 2,340

2004 55,149 278 3.3% $25.31 9.9 2,364

2005 57,500 287 3.2% $25.93 10.2 2,351

2006 59,814 296 3.1% $26.49 10.4 2,314

2007 62,079 304 2.9% $27.00 10.5 2,265

2008 64,290 313 2.8% $27.47 10.7 2,210

2009 66,441 322 3.0% $27.96 10.8 2,151

Source: Torto Wheaton Research

Exhibit 8 San Francisco, CA Forecast, Office Real Estate 1999 - 2009

Year Rentable Sq. Employment Employment Rental Rates Vacancy Rate New Office 

Ft. (1,000) (1,000) Growth(%) ($/RSF) (%) Completions

(RSF x 1,000)

1999 71,453 324 2.1% $38.19 8.4 2,252

2000 73,478 328 1.4% $37.79 11.5 2,024

2001 75,603 335 2.0% $35.92 13.0 2,125

2002 78,787 341 2.0% $34.18 13.8 3,184

2003 83,052 348 1.9% $32.67 14.8 4,265

2004 87,049 354 1.8% $31.08 15.0 3,996

2005 90,182 361 1.8% $29.88 14.0 3,134

2006 92,608 367 1.7% $29.65 12.5 2,426

2007 94,649 373 1.5% $30.51 11.0 2,040

2008 96,454 378 1.4% $32.08 10.2 1,805

2009 98,083 384 1.6% $33.85 9.8 1,628

Source: Torto Wheaton Research
Appendix D: Exhibits for Top 10 Growing U.S. Commercial Realty Markets and National Forecast

57

Exhibit 9 San Jose, CA Forecast, Office Real Estate 1999 - 2009

Year Rentable Sq. Employment Employment Rental Rates Vacancy Rate New Office 

Ft. (1,000) (1,000) Growth(%) ($/RSF) (%) Completions

(RSF x 1,000)

1999 34,157 239 3.2% $28.44 5.9 1,454

2000 37,320 244 2.2% $29.21 10.1 3,163

2001 41,434 250 2.6% $29.35 15.9 4,114

2002 45,060 256 2.1% $28.15 18.1 3,626

2003 48,189 261 2.2% $26.94 18.0 3,129

2004 50,748 266 2.0% $26.16 17.1 2,559

2005 52,675 272 2.0% $25.71 16.0 1,928

2006 54,094 277 2.0% $25.58 14.9 1,418

2007 55,166 282 1.8% $25.74 13.9 1,071

2008 56,020 287 1.8% $26.16 13.1 854

2009 56,761 293 2.0% $26.77 12.5 741

Source: Torto Wheaton Research 

Exhibit 10 Seattle, WA Forecast, Office Real Estate 1999 - 2009

Year Rentable Sq. Employment Employment Rental Rates Vacancy Rate New Office 

Ft. (1,000) (1,000) Growth(%) ($/RSF) (%) Completions

(RSF x 1,000)

1999 64,063 269 4.1% $22.33 10.1% 5,676

2000 69,828 272 0.9% $22.91 16.2% 5,765

2001 74,511 277 2.0% $22.54 16.1% 4,683

2002 78,131 283 2.1% $22.22 12.6% 3,621

2003 81,291 289 2.2% $22.18 12.3% 3,160

2004 83,894 296 2.6% $21.94 14.8% 2,604

2005 86,211 305 3.0% $21.48 15.8% 2,316

2006 88,399 315 3.0% $21.22 14.3% 2,188

2007 90,286 324 3.0% $21.38 12.6% 1,887

2008 91,783 333 2.9% $21.80 12.1% 1,497

2009 93,093 342 2.7% $22.31 12.3% 1,310

Source: Torto Wheaton Research
Appendix D: Exhibits for Top 10 Growing U.S. Commercial Realty Markets and National Forecast

58

Exhibit 11 Washington, DC Forecast, Office Real Estate 1999 - 2009

Year Rentable Sq. Employment Employment Rental Rates Vacancy Rate New Office 

Ft. (1,000) (1,000) Growth(%) ($/RSF) (%) Completions

(RSF x 1,000)

1999 224,781 731 4.5 $25.92 7.0 8,216

2000 235,880 743 1.7 $28.39 9.2 11,099

2001 249,363 761 2.5 $29.51 11.6 13,483

2002 263,907 779 2.3 $29.60 13.5 14,544

2003 277,844 795 2.1 $28.83 14.7 13,936

2004 289,730 813 2.3 $27.57 14.9 11,886

2005 298,719 832 2.2 $26.29 14.4 8,989

2006 304,670 852 2.3 $25.36 13.2 5,951

2007 308,063 872 2.4 $25.07 11.7 3,392

2008 309,802 894 2.4 $25.56 10.2 1,739

2009 310,986 915 2.4 $26.79 8.9 1,185

Source: Torto Wheaton Research
Appendix E

59

Resources/

References

(Arenas, J.P.) Arenas, John P. "The

Disposable Office." Corporate Real

Estate Executive Magazine,

September 1999

(Bencivenga, D.) Bencivenga, D. "A

Humanistic Approach to Space." HR

Magazine, March 1998

"New Olsten Center Study Reports

Online Technologies Have Positive

Impact on Workplace Productivity."

Business Wire, January 2000

(Caloz, J.W.) Caloz, Jack W. "Real

Intelligence." Building Operating

Management Magazine, May 1999

Challenger, James E.

"Telecommuting Symbolizes New

Economy." October 1999

Chonin, Neva. "The Workplace." San

Francisco Chronicle, November 1999

(Gorman, M.T.) Gorman, Michael T.

"More than a Workplace." Building

Operating Management Magazine,

October 1999

(Government Executive) "Furniture."

Government Executive Magazine,

August 1999

"Green Building Report." Building

Operating Management Magazine,

September 1999

(Grossman, R.J.) Grossman, Robert

J. "Heirs Unapparent." HR Magazine,

February 1999

GSA, Public Buildings Service,

Office of Federal Protective Service

Resources/References and

Supplemental Reading Materials
Appendix E: Resources/References and Supplemental Reading Materials

60

(Mosher, D.) Mosher, Diana.

"Michael Brill: Demonstrating the

Importance of Workplace Design."

Facilities Design & Management,

December 1999

"High-Benefit Lighting: The New

Rules." Building Operating

Management, April 2000

O'Connell, Sandra E. "The Virtual

Workplace Moves at Warp Speed."

HR Magazine, March 1996

(Outlook) Outlook, Building

Operating Management Magazine,

July 1999

(Peri, F.) Peri, Frank. "Changing

Technology is Changing Rules."

Building Operating Management

Magazine, July 1999

(Piper, J.) Piper, James. "ECommerce: Time to jump in?"

Building Operating Management

Magazine, April 2000

(PricewaterhouseCoopers, 1999)

PricewaterhouseCoopers. "Real

Estate Value Cycles." 1999

(Raiford, R.) Raiford, Regina. "The

Next 100 Years." Buildings Magazine,

January 2000

(Raiford, R.) Raiford, Regina. "Into

Uncharted Territory." Buildings

Magazine, June 1999

(Roodman & Lenssen) Roodman,

David M. and Lenssen, Nicholas. "A

Building Revolution: How Ecology

and Health Concerns are

Transforming Construction."

Worldwatch Institute, March 1995

GSA, Office of Real Property. "The

Integrated Workplace: A

comprehensive Approach to

Developing Workspace." May 1999

GSA, Office of Real Property. "Real

Property Sustainable Development

Guide." June 2000

International Development Research

Council, "Telltale Signs of Changes

and the Need for Greater

Integration." 

(Inman) Inman Real Estate Connect

2000, Feb. 2000

"Open for Business." The Journal of

Business and Design, P. 30, Vol. 5

Kelly, Abigail "Debunking the Myths

of ADA." Building Operating

Management Magazine, July 1999

Kroll, Karen M. "Financing an Energy

Upgrade." Building Operating

Management Magazine, August 1999

(Light, P.) Light, Paul C. "The New

Public Service." Government

Executive Magazine, January 2000

Lobash, Mike. "New Times, New

Threats." Building Operating

Management Magazine, July 1999

Martinez, Michelle N. "An Inside

Look At Making the Grade." HR

Magazine, March 1998

(Miller, C.) Miller, Craig. "Smarter

Buildings Smarter Owners."

Facilities Design & Management

Magazine, December 1999
Appendix E: Resources/References and Supplemental Reading Materials

61

Respond, Kathryn M. "Defensive

Power Planning." Building Operating

Management Magazine, August 1999

(Rospond, K.M.) Respond, Kathryn

M. "Energy Efficiency and IAQ."

Building Operating Management

Magazine, December 1999

Salamone, Salvatore.

"Telecommuting Costs Can Quickly

Add Up." Internetweek Online,

November 1999

(Salimando, J.) Salimando, Joe.

"Marketplace 2000: Forecasters

Can't Find a Cloud in the Silver

Lining." Buildings Magazine, January

2000

(Skylines) Skylines Magazine, July

1999

Smith, Jana. "No Reservations

About Hoteling." Buildings

Magazine, January 2000

Sparks, Karen A. "The Internet is

Transforming Real Estate

Transactions." Corporate Real Estate

Executive, December 1999

Stein, Joan W. "Plan Now or Pay

Later." Building Operating

Management Magazine, January

2000)

Sullivan, Edward. "T 8 Systems in a

New Light." Building Operating

Management Magazine, December

1999

(Tagliafeere, L.) Tagliafeere, Lewis.

"Energy Connections." Buildings

Magazine, February 2000

(Tagliafeere, L.) Tagliafeere, Lewis.

"Energy Connections." Buildings

Magazine, November 1999

(Vergetis Lundin, B.L.) Vergetis

Lundin, Barbara L. "Security: Today's

Bottom Line." Building Operating

Management Magazine, May 1999

(Westfall, S.L.) Westfall, Steven L.

"Why the "All-In" Service Model is

the Trend of the Future." FM DATA,

1999

(Williams, J.) Williams, James. "The

New Workforce" Business Week,

March 2000

(Zemke, Raines & Filipczak) Zemke,

Ron; Raines, Claire; & Filipczak, Bob.

"Generations at Work: Managing the

Clash of Veterans, Boomers, Xers,

and Nexters."
Appendix E: Resources/References and Supplemental Reading Materials

62

Molitor, Graham. "Trends and

Forecasts for the New

Millennium." The Futurist;

August-September 1998.

Mr. Molitor has identified 65 specific

trends that provide insight on what

the twenty-first millennium might

look like. 

McKinley and Conway. "The

Super Century Arrives." The

Futurist, March 1998.

The authors predict massive

construction projects for the next

decade, including intelligent

highways, huge island airports, and

"super metros." New projects early

in the century will focus on solving

water problems and finding

alternative fuels, particularly to

address greenhouse warming. To

address the problem of high urban

land costs and urban sprawl/

congestion, designers will plan for

facilities to move more below

ground; thus leaving more surface

areas for parks and recreation.

McKinley and Conway. "The

Great Cities of the Future." The

Futurist, June-July 1999.

The author predicts that citizens will

seek to enjoy the benefits of big

cities without actually living in them.

Thus, in an effort to attract and

retain workers, companies will look

for sites that have the following

attributes:

• A metro center with urban

services, a convention center,

international airport, research

and medical centers, universities, a domed stadium, and

museums.

• A satellite area with business

parks and office areas offering

functional and aesthetic

features.

• A "hinterland" that will provide

quiet, protected residential areas

served by schools and shopping,

law enforcement, and utility

services.

• A location close to the ocean or

lakes with pleasant year-round

climate.

• Proximity to high-speed rapidtransit systems.

The author concludes that Atlanta,

Georgia and Denver, Colorado are

the two U.S. cities that best meet the

above criteria.

Author unknown. "United States:

Aren’t Cities Great?" The

Economist, August 14, 1999.

The report discusses the results of a

study by the Brookings Institution

and Fannie Mae Foundation on 26

cities. It found that all 26 cities

expect downtown growth in the next

10 years. These cities are keeping

their current residents and are

enticing suburban residents to move

back; thus addressing the problem of

urban sprawl. Young professionals

are having children later, allowing

them to stay in the city longer.

Empty nesters are also rediscovering

the appeal of the urban life, spurred

by the reduction in crime rates.

Cities will have a comparative

advantage over other areas since

they are a hub of culture, the arts,

good dining, sports, and

entertainment.

Nassar, Haya. "West, South Are

Building More Population

Muscle." USA Today, December

31, 1998.

The article analyzes census data

and estimates from the Election

Data Services, Inc. The analysis

shows that Arizona, California,

Nevada, Florida, Texas, Montana, and

Supplemental

Reading Materials
Appendix E: Resources/References and Supplemental Reading Materials

63

Georgia will be the fastest growing

areas in the twenty-first century.

Becker, Franklin, and Steele,

Fritz. "Workplace by Design:

Mapping the High-Performance

Workspace." 1995.

The authors provide examples from

Levi Strauss, Chrysler Corporation,

Steelcase, and others. The argument

is made that space is a tool for

achieving business goals, not a drain

on profits. They maintain that

executives, human resource

specialists, and design consultants

must collaborate to create spaces

that can generate increased levels of

teamwork and cross-functional

collaboration—all of which results in

greater productivity. 

Author unknown. "Workplaces of

the Future." Workforce, August

1999.

The publication discusses what

companies want in a productive work

environment. The workplace should

be technologically advanced yet

warm and inviting, promote colorful

and almost playful facilities, and

provide interactive connectivity with

the outside world. In addition, the

following trends were identified:

• The "pack-them-in" mentality

will give way to a more spacious

human environment to attract

and retain workers.

• The concept of "green" buildings

will greatly expand, resulting in

buildings that have better air

quality, building materials that do

not emit gas, and facilities that

have greater access to natural

light for all employees.

• Ceiling heights will be raised as

the popularity of converting

industrial/ warehouse buildings

into office space increases.

• Square footage per office space

will shrink to accommodate more

space for shared amenities

(cafeterias, fitness centers, etc.)

• Customization will be the

standard in workplace planning.

Thus, one size no longer fits all.

Author unknown. "The Best

Places to Live in America,"

Fortune, 1999.

The article provides some

interesting insight on where U.S. 

job growth will take place in the

twenty-first century. The five cities

with the largest job growth rate are 

Las Vegas, NV; Punta Gorda, FL;

Austin, TX; Provo, UT; and

Fayetteville, AR. The 10 most

important factors in deciding where

to live are (1) clean water, (2) low

crime, (3) clean air, (4) good public

schools, (5) low property taxes, 

(6) low cost of living, (7) home

appreciation, (8) strong local

government, (9) strong state

government, and (10) low sales

taxes.

Author unknown. "Employees

More Interested in Office Design

than HR Thinks," Facilities

Design & Management, July 1999.

The article concludes that the

design of a workplace is a deciding

factor for employees who are

considering working at a company,

according to research sponsored by

the American Society of Interior

Designers. The study showed that

physical workplace is tied with

benefits as the second most

important factor influencing their

decisions to accept or leave jobs

(the first is compensation). The

most important elements of the

workplace to workers were a visually

appealing facility, new or ergonomic

furniture, and up-to-date technology.
Appendix E: Resources/References and Supplemental Reading Materials

64

Nussbaum, N., "Blueprints for

Business," Business Week,

November 1997.

The article provides highlights of

innovations by U.S. businesses that

won building architecture awards for

solving business problems,

particularly with respect to reducing

costs and improving worker morale.

Included were discussions on

"flexible spaces" (at 3Com,

Microsystems, etc.) to bring about

"fortuitous encounters" between

disparate groups that led to new

ideas or products. In addition, there

was an overview on the Herman

Miller, Inc. building referred to as

SQA (for simple, quick, and affordable). The building has few walls,

provides many amenities and offers

office space that has windows that

permit sunshine and "green" views.

Author unknown. "Office

Designers Show That They

Practice What They Preach,"

Management Today, April 1998.

The office design company, DEGW,

redesigned its own offices in

London, resulting in the

accommodation of 27 percent more

employees in the building. They

found that certain employees were

out of the workspace over 40 percent

of the workweek and had no real

requirement for an assigned office.

They concluded that it was better to

occupy space on an as needed basis

("hoteling"). The company

integrated cordless and mobile

technologies (including a wireless

local area network) which enable

employees to freely move around the

different office zones. In addition to

increasing headcount by 27 percent,

the company states that the

redesign has created an environment

that promotes collaborative

teamwork.

Lehman-Smith, D., and Mcleish,

J., "Corporate Clients Want

Workplaces that Streamline

Processes and Retrain

Employees," Architectural

Record, September 1999.

The authors argue that companies

demand new offices and facilities

with designs focused on critical

workplace issues such as workflow,

corporate culture, productivity, and

worker attraction and retention. The

article submits that many

architectural firms do not recognize

that interiors increasingly drive the

design process. As a result, interior

architects are now taking a

significant role on the design team. 

Zelinsky, M., "New Workplaces

for New Workstyles;" McGrawHill, 1998.

The book discusses alternative

office strategies and the process of

creating alternative workplace

environments. The publication also

provides case studies and examples

of cost-benefit analysis; a client

questionnaire on needs for

alternative workplaces, and

templates for telecommuting policy

and agreements.

Author unknown, "By 2010, We

May Face Another Energy Crisis

That Architects Can Help Solve,"

Architectural Record, February

1999.

The article discusses that experts

are predicting another energy crisis

in the near future, thus, designers

must plan for employment of new

energy-saving technologies since

buildings account for 40 percent of

energy use in the U.S. Specifically

discussed are photovoltaic (PV)

cells, which generate electricity by

harvesting sunlight. A most

promising prototype was the Solar-
Appendix E: Resources/References and Supplemental Reading Materials

65

Powered Glass Pavilion recently

showcased at the Cooper-Hewitt

National Design Museum in New York

City. The structure featured multiple

PV modules and clear glass panels

that generated enough electricity to

power its ventilation system and all

lighting. 

Blatterman, J., "The Future:

News to Move People Around

Really Big Buildings,"

Architectural Record, February

1997.

The author states that the twentyfirst century design, security, and

life-safety concerns are prompting a

review of transportation within large

or mega-buildings. This is of

particular importance in view of the

aging population (older employees

and customers will have greater

difficulty descending the large

number of stairs from higher stories). 

The article also discusses new types

of elevators. For example, a

Japanese manufacturer is developing

an elevator using magnetic levitation

to correct for minute deviations in

elevator guide rails, preventing the

physical discomfort associated with

vibrations and eliminating all

sensation of speed in the elevator car

itself. Otis Elevator is developing the

sideways elevator, called Odyssey. 

Templin, N., "Windows that Open

Are the Latest Office Amenity,"

Wall Street Journal, August 26,

1998.

The article discusses the Gap, Inc.,

buildings in San Bruno, California.

The roof of the administration

building has a field of native grasses

and wild-flowers planted on its

surface that undulates like the

surrounding green hills. Additionally,

the cooling system pumps cool night

air under the floor slabs.

The article goes on to discuss that

"operable windows" are coming back

into favor in an effort to address

employee morale. The article notes

that in Europe, fresh air and natural

light for workers are often required

in local ordinances.

Author unknown, "Gardens in

Healthcare Facilities,"

Architecture, January 1997.

The author discusses the results of

18 specific facilities that have built

gardens and plazas in and around

their buildings. The findings show

that people expressed that they felt

more rejuvenated, that the

environment enabled them to think

more clearly, or that it generated a

sense of spiritual well being. 

Lindsey, Gail. A., "Green Building

Challenge," Architecture,

February 1999.

The article discussed the goals,

process, and early results of the

efforts of the International

Framework Committee (IFC), a

group of international building

industry professionals from 14

countries, including the US, Canada,

the UK, France, Germany, and Japan.

The goals of the IFC are to reduce

global warming and to increase

market demand for green buildings.

Members of the IFC are conducting

case studies in their countries to

determine the critical elements and

objective measures for effectiveness

of green buildings. This would result

in the Green Building Assessment

Tool (GBTool) which would address

questions like: 

• Does a building perform to a

specified level of energy

consumption?

• What is the recommended level

of air quality?
Appendix E: Resources/References and Supplemental Reading Materials

66

• What is the amount and content

of the solid waste produced by

construction?

• What percentage of materials

should contain recycled content?

Further information can be obtained

through the web-site:

www.greenbuildings.ca.

Author unknown, "Seeking

State’s First Green Building

Certification," BioCycle; June

1999.

The author describes the efforts of

two companies (Paric Corp. and

Hellmuth, Obata and Kassabaun,

Inc.) to obtain Missouri’s first green

building certification under the

standards established by the U.S.

Green Building Council. The Nidus

Center for Scientific Enterprise is a

41,000 square foot building that

consists of materials such as

recycled aluminum window frames

and steel support beams made

partly with salvaged material. Highefficiency energy systems are also

included in the structure and they

consume 40-60 percent less in nonrenewal resources.

The building's metal roof channels

rainwater into six corrugated metal

silos. The interior will include a

landscaped atrium under a pyramidal

skylight. One face of the atrium will

consist of large stones with plants to

filter toxins from the air. The

company’s labs will have sloped

ceilings of clear and tinted glass to

allow in natural light to promote

morale and further reduce energy

costs.

Howard Associates, "Green

Building: A Primer for Builders,

Consumers and Realtors,"

Building Environmental Science

and Technology, 1999.

The publication predicts that in the

next 10-20 years, there will be an

accelerated movement to address

the environmental problems of

global climate change, enlargement

of the ozone "hole," topsoil

depletion, erosion, and ground water

contamination. Thus, there will be

much increased emphasis on the

preservation of natural resources.

The primer suggests that building

specifications of the future need to

include language such as:

"The contractor shall:

• Employ recycled, renewable, and

previously used but structurally

sound building materials

wherever feasible;

• Minimize waste, spillage,

pilferage, spoilage, and misuse of

building materials;

• Maximize energy and water use

efficiency by exceeding local

energy standards in the building

code for site planning, thermal

insulation, and mechanical

systems; 

• Reduce indoor levels of radon

gas and formaldehyde emissions;

and

• Provide consumer operating and

maintenance information for best

performance in this project

through careful planning,

specification, job site

management, and labor

supervision."
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