An empty future feared for offices

DEMAND for office space is unlikely to keep pace with the growth of the economy, or even the rate of employment in the service sector.

This warning comes from a survey of employment trends by Paul Ives of surveyors Erdman Lewis. The forecast could combine with fears of interest rate rises to dampen further growth in property values, and destroy recovery hopes for older, second-line factories and offices.

'Despite the recent upturn in employment figures, the actual numbers employed are unlikely to return to 1990 levels this century,' Mr Ives says.

'Add to this the trends in part-time substitution of full-time jobs, changing management structure, teleworking and generally more flexible work patterns, and the dependence on the type of property on offer today can only diminish.'

His forecasts seemed to be confirmed at a recent conference of office managers from large businesses, who said they had no plans to take on additional space and were more likely to be selling. This fits with experience in the United States, where 'second-wave' restructuring in the later stages of economic recovery puts even greater pressure on management numbers.

Mr Ives points out that 'a great deal of both industrial and office space is used relatively inefficiently at present'. New open-plan offices could be used more flexibly.

The coming trend, he says, is an IBM office in New Jersey which is a converted warehouse and consists entirely of work booths that are re-allocated daily to avoid wasted space.

Increased efficiency will be combined with steady reduction of executive numbers. In the past few months a handful of big companies have between them announced 50,000 managerial redundancies.

Mr Ives' analysis also pinpoints several sectors where the demand for labour is increasing. These include contract cleaning, which does not require additional office space, and computer software services.

He describes the latter as a 'very fragmented part of the industry characterised by 40,000 mainly small firms, many of which operate from residential addresses using part-time staff'.

(Photograph omitted)