The office vacancy rate plunged by 0.9% to 18.4% during the spring, and rental rates fell to levels more than 7% below those seen last year, according to BD+C Economist Jim Haughey. A number of large office markets, such as New York and San Francisco, saw vacancy levels reach 20%. Overall, net space rentals fell during the spring in every major office market except Pittsburgh.
Developers responded quickly to reduced profit prospects in the office market. Office construction spending expanded through September 2008 but has since declined 16.4% through June. Office project starts declined slowly in early 2009 and then dropped sharply in the last two months, with starts for June-July more than 50% below the average for the previous 18 months. These slow starts shrink the pipeline of work under way and assure a further 6% drop in monthly jobsite spending by next spring.
The 2009-10 office recession will be relatively mild compared to the recession earlier this decade when construction spending dropped 47% over 27 months. This time the expected decline is 22% over 19 months. Recession declines are approximately proportional to the rise in the preceding expansion period. The 2004-08 expansion in office construction was shorter and smaller than the overheated expansion that preceded the previous recession.
The good news is that three market niches show promise of relatively slight declines over the next year. Government office construction, which has so far fared worse than private development, is likely to reverse course when stimulus-funded buildings get started next year. Financial offices, a relatively small niche, appears to be past the worst of its recession, and job site spending has been stable in recent months after a 20% drop last year as a result of forced mergers by the Federal Reserve Bank and the FDIC. Lastly, office renovation projects show promise because they typically decline much less in a recession than does new office construction.
Related Stories
Building Team | Nov 7, 2022
U.S. commercial buildings decreased energy use intensity from 2012 to 2018
The recently released 2018 Commercial Buildings Energy Consumption Survey (CBECS) by the U.S. Energy Information Administration found that the total floorspace in commercial buildings has increased but energy consumption has not, compared with the last survey analyzing the landscape in 2012.
Sports and Recreational Facilities | Nov 7, 2022
Gilbane, Turner, Populous tapped to design and build new Buffalo Bills stadium
The joint venture of Gilbane Building Company and Turner Construction Company, in association with 34 Group, has been selected to provide construction management of the planned new NFL stadium for the Buffalo Bills in Orchard Park, N.Y. The project team also includes the project management firm, Legends Project Development, and Populous as the designer.
| Nov 7, 2022
Mixed-use tower in China features world’s highest outdoor pool
Guangxi China Resources Tower, a new 403-meter-tall (1,322 feet) skyscraper in Nanning, China features the world’s highest outdoor pool—at 323 meters (1,060 feet) above grade.
Building Team | Nov 3, 2022
More than half of U.S. contractors say finding skilled workers is big barrier to their growth
More than half of U.S. contractors (55%) say finding enough skilled workers is one of the biggest barriers to growing their business, according to a DEWALT Powering the Future Survey.
Building Materials | Nov 2, 2022
Design for Freedom: Ending slavery and child labor in the global building materials sector
Sharon Prince, Founder and CEO of Grace Farms and Design for Freedom, discusses DFF's report on slavery and enforced child labor in building products and materials.
Codes and Standards | Nov 2, 2022
New York City construction official wants to boost design-build
The new associate commissioner of alternative delivery in New York City’s Department of Design and Construction aims to encourage more design-build project delivery in the city.
University Buildings | Nov 2, 2022
New Univ. of Calif. Riverside business school building will support hybrid learning
A design-build partnership of Moore Ruble Yudell and McCarthy Building Companies will collaborate on a new business school building at the University of California at Riverside.
Building Team | Nov 1, 2022
Nonresidential construction spending increases slightly in September, says ABC
National nonresidential construction spending was up by 0.5% in September, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau.
40 Under 40 | Nov 1, 2022
40 Under 40 class of 2022 winners: Meet the architects
Of the up-and-coming AEC professionals to be named 40 Under 40 class of 2022 winners by the editors of Building Design+Construction, 22 make their living in the architecture profession.
K-12 Schools | Nov 1, 2022
Safety is the abiding design priority for K-12 schools
With some exceptions, architecture, engineering, and construction firms say renovations and adaptive reuse make up the bulk of their work in the K-12 schools sector.