In what is likely a historic first, the amount of office space in the U.S. is forecast to decline in 2023, according to Jones Lang LaSalle.
This would be the first net decline according to data going back to 2000, JLL says, and it’s likely the first decline ever.
National office inventory is believed to have never declined in the past, though it may have come close to doing so during the Great Depression.
A dearth of new construction and a large amount of office space being repurposed or destroyed accounts for the project decline this year. Less than five million sf of new office space has broken ground in the U.S. this year, while 14.7 million sf has been removed.
The post-pandemic work-from-home trend and the increased costs of borrowing have dampened the office market. Office delinquencies are on the rise, and property values in the office sector are falling.
Recent analysis from market research firm Trepp estimated average office building valuation declines from 52% for those constructed after 2000 to 60% for pre-1950 buildings. This sets “a gloomy tone” for the future office market, Trepp says.
Related Stories
Mixed-Use | Jun 6, 2023
Public-private partnerships crucial to central business district revitalization
Central Business Districts are under pressure to keep themselves relevant as they face competition from new, vibrant mixed-use neighborhoods emerging across the world’s largest cities.
Energy-Efficient Design | Jun 5, 2023
Implementing an ‘asset drawdown strategy’ for site decarbonization
Solidifying a decarbonization plan via an “asset drawdown strategy” that carefully considers both capital and operating costs represents a game-changing opportunity for existing properties to compete with new projects.
Office Buildings | Jun 5, 2023
Office design in the era of Gen Z, AI, and the metaverse
HOK workplace and interior design experts Kay Sargent and Tom Polucci share how the hybrid office is evolving in the era of artificial intelligence, Gen Z, and the metaverse.
Urban Planning | Jun 2, 2023
Designing a pedestrian-focused city in downtown Phoenix
What makes a city walkable? Shepley Bulfinch's Omar Bailey, AIA, LEED AP, NOMA, believes pedestrian focused cities benefit most when they're not only easy to navigate, but also create spaces where people can live, work, and play.
Mixed-Use | Jun 1, 2023
The Moore Building, a 16-story office and retail development, opens in Nashville’s Music Row district
Named after Elvis Presley’s onetime guitarist, The Moore Building, a 16-story office building with ground-floor retail space, has opened in Nashville’s Music Row district. Developed by Portman and Creed Investment Company and designed by Gresham Smith, The Moore Building offers 236,000 sf of office space and 8,500 sf of ground-floor retail.
Office Buildings | May 24, 2023
The future of work: What to expect in 2023
While no one disagrees that the workplace has undergone tectonic changes, it is less clear how to understand these shifts and synthesize them into practical action for the coming year.
Multifamily Housing | May 23, 2023
One out of three office buildings in largest U.S. cities are suitable for residential conversion
Roughly one in three office buildings in the largest U.S. cities are well suited to be converted to multifamily residential properties, according to a study by global real estate firm Avison Young. Some 6,206 buildings across 10 U.S. cities present viable opportunities for conversion to residential use.
Headquarters | May 16, 2023
Workplace HQ for party clothing company Shinesty celebrates its bold, whimsical products
The new Denver headquarters for Shinesty, a party clothing company, was designed to match the brand’s fun image with an iconic array of colors, textures, and prints curated by the design agency, Maximalist. Shinesty’s mission, to challenge the world to live more freely and “take itself less seriously,” is embodied throughout the office interior.
Office Buildings | May 15, 2023
Sixteen-story office tower will use 40% less energy than an average NYC office building
This month marks the completion of a new 16-story office tower that is being promoted as New York City’s most sustainable office structure. That boast is backed by an innovative HVAC system that features geothermal wells, dedicated outdoor air system (DOAS) units, radiant heating and cooling, and a sophisticated control system to ensure that the elements work optimally together.
Headquarters | May 15, 2023
The new definition of Class A property
Dan Cheetham, Managing Director and Founder of FYOOG, believes organizations returning to a "hub and spoke" model could have a profound effect on properties once considered Class B.
