With work-from-home firmly established, many real estate analysts predict a dramatic reduction in office space leasing and plummeting property values.
But the high-end of the office segment might actually be headed for a shortage, according to real estate intelligence company CoStar Group. This counterintuitive trend is due to a drastic drop in construction of elite Class A properties.
Despite the overall drop in occupied office space, buildings aged 0-3 years are doing well. They have attracted an average of 12.7 million sf per quarter since the beginning of 2020. By comparison, the quarterly average from 2011-2019 for similar properties was 11.7 million sf.
Office construction has slowed dramatically this year. Less than 30 million sf has broken ground in 2023, making it the lowest year for construction starts since 2011. If this trend continues, the type of space most in demand—newly constructed units—will have the shortest supply.
Related Stories
Giants 400 | Oct 18, 2017
Top 105 office construction firms
Turner Construction Co., Structure Tone, and Holder Construction top BD+C’s ranking of the nation’s largest office sector contractors and construction management firms, as reported in the 2017 Giants 300 Report.
Giants 400 | Oct 17, 2017
Top 60 office engineering firms
AECOM, WSP, and Thornton Tomasetti top BD+C’s ranking of the nation’s largest office sector engineering and EA firms, as reported in the 2017 Giants 300 Report.
Giants 400 | Oct 17, 2017
Top 110 office architecture firms
Gensler, Jacobs, and HOK top BD+C’s ranking of the nation’s largest office sector architecture and AE firms, as reported in the 2017 Giants 300 Report.
Reconstruction & Renovation | Sep 28, 2017
Plans for Chicago’s historic Post Office building revealed by 601W Companies and Gensler
The redevelopment project is currently the largest in the nation.
Office Buildings | Sep 27, 2017
Gensler designs New Jersey law firm’s new headquarters space
The HQ occupies 75,000 sf in a 400,000-sf suburban office building.
Mixed-Use | Sep 26, 2017
Perkins+Will designs new international business community in Cali, Colombia
The new free trade zone is designed to resemble a small village.
Office Buildings | Sep 20, 2017
Five Stantec offices move into one Fifth Avenue location
The new location provides the firm with 40,000 sf of space.
Industrial Facilities | Aug 29, 2017
Clayco completes construction on Georgia-Pacific Distribution Center
The new facility expands on the company’s old distribution facility by over 300,000 sf.
Green | Aug 24, 2017
Business case for WELL still developing after first generation office fitouts completed
The costs ranged from 50 cents to $4 per sf, according to a ULI report.
Market Data | Aug 20, 2017
Some suburban office markets are holding their own against corporate exodus to cities
An analysis of mortgage-backed loans suggests that demand remains relatively steady.
