Since starting in Commercial Real Estate in 1984, I’ve witnessed numerous transformations in the office market over the years.
Within the past 40 years, Harrisburg’s office market has transitioned from a stable, traditional environment to a dynamic, flexible landscape. The evolution has been driven by economic diversification, technological advancements, and significant shifts in work culture.
Economic Context
1984: In the early 1980s, Harrisburg’s economy was buoyed by its status as Pennsylvania’s state capital, offering a stable foundation through government employment. This stability, coupled with a recovery from the early 1980s recession, helped maintain a steady local economic climate. The office space market reflected this stability, with a consistent demand driven largely by government agencies and associated service sectors.
2024: Fast forward to 2024, Harrisburg’s economy has diversified significantly. No longer reliant solely on government employment, the region now boasts robust healthcare, education, and technology sectors, thanks to substantial economic development efforts and infrastructure investments. The growth of these sectors has introduced new dynamics into the local economy, influencing office space demand and usage patterns.
Office Space Demand
1984: During the early ’80s, the demand for office space was relatively stable, largely fueled by government and related service industries. This stability was reflected in a generally steady office market, with low vacancy rates indicative of a solid demand for traditional office settings.
2024: In 2024, office space demand has become more complex. Remote work trends and economic fluctuations have reshaped demand patterns. The COVID-19 pandemic accelerated a shift towards hybrid and remote work models, leading to fluctuating vacancy rates. While traditional office space needs have been impacted, there is a rising demand for flexible and collaborative workspaces.
Office Market Characteristics
1984: Office buildings in the 1980s were predominantly low-rise and characterized by functional, traditional designs. The market was marked by conventional layouts that emphasized private offices and formal meeting rooms, reflecting the era’s business culture and technological limitations.
2024: In contrast, the office buildings of 2024 feature modern design elements that emphasize sustainability and flexibility. High-rise structures with eco-friendly features and open floor plans are now common. The focus has shifted to creating multi-use spaces that cater to a range of activities and work styles, aligning with contemporary demands for versatility and environmental consciousness.
Vacancy Rates
1984: Vacancy rates in the 1980s were relatively low, a testament to the steady demand for office space driven by stable government-related employment and business operations in the region.
2024: Vacancy rates in 2024 are influenced by the shift toward remote and hybrid work models, leading to higher vacancy rates in traditional office spaces. However, this has also spurred an increase in demand for flexible and co-working spaces, as businesses adapt to new work environments and seek solutions that support both in-office and remote work.
Leasing Trends
1984: Leasing trends in the early ’80s were characterized by long-term agreements. Office layouts favored traditional setups with private offices and formal meeting areas, reflecting a more static and predictable work environment.2024: Today, leasing trends have shifted toward shorter-term agreements and flexible office solutions. The rise of co-working spaces and hybrid work models has necessitated a move away from long-term leases. Modern office spaces are designed to be adaptable, with a focus on creating environments that support diverse work styles and collaboration.