Last year, construction spending in New York City was up 26%, to $36 billion. And construction employment in the Big Apple, at 122,975, was the highest it’s been since 2008, according to the New York Building Congress. Of that dollar total, spending on nonresidential construction increased by 20% to $9.8 billion, the first time since 2010 that nonresidential spending grew year-to-year.
Those heady numbers, though, are no guarantees of future spending. In fact, New York is among the major metros—including Washington D.C., Phoenix, and San Diego—where office building development and construction are tailing off from historic levels or cooling down, according to CoStar, the real estate market research firm, in its report on the national office market trends for the first quarter of 2015.
The good news is that an estimated 108 million sf of office space were under construction in the U.S. at the end of the first quarter, a 17% gain over the same period a year ago. That construction level approached the historical average of 122 million sf, which the country last achieved in late 2008.
The cautionary news is that 15 million sf of office space were delivered in the first quarter of 2015, the first time in the latest economic cycle that deliveries exceeded net absorptions, which during that quarter were 12 million sf.
CoStar estimates that construction levels are above historic norms in about one-third of the largest U.S. metros. It singles out Silicon Valley in Northern California, which is seeing a rash of corporate campuses springing up. Other above-average office construction markets include Dallas-Fort Worth, Raleigh, Boston, and Chicago.
The researcher cites a shift in strategy among office building developers such as Boston Properties, which is using capital from the sale of older for new developments with potentially higher yields. Boston Properties has 11 office projects totaling 3.3 million sf in its current development pipeline.
CoStar notes that while rising rents are driving the office construction booms in certain markets like San Francisco, two thirds of the country’s metros are still not seeing the kind of rent appreciation that would justify large-scale new office construction.
That being said, among the notable deliveries in the first quarter was the 1.5-million-sf second phase of ExxonMobil’s corporate campus in Houston, which is also where a 1.7-million-sf campus that is fully leased to FMC Technologies got started during the quarter.
Lincoln Property started the first new office building in San Francisco’s Financial District in a decade, a 433,000-sf project that, despite being built on spec, shouldn’t have too much trouble finding tenants in a market whose office vacancy rate for four- and five-star buildings is 7.8%.
Related Stories
| Sep 6, 2022
Demand for flexible workspace reaches all-time high
Demand for flexible workspace including coworking options has never been higher, according to a survey from Yardi Kube, a space management software provider that is part of Yardi Systems.
| Sep 2, 2022
Converting office buildings to apartments is cheaper, greener than building new
Converting office buildings to apartments is cheaper and greener than tearing down old office properties and building new residential buildings.
Mass Timber | Aug 30, 2022
Mass timber construction in 2022: From fringe to mainstream
Two Timberlab executives discuss the market for mass timber construction and their company's marketing and manufacturing strategies. Sam Dicke, Business Development Manager, and Erica Spiritos, Director of Preconstruction, Timberlab, speak with BD+C's John Caulfield.
Giants 400 | Aug 22, 2022
Top 90 Construction Management Firms for 2022
CBRE, Alfa Tech, Jacobs, and Hill International head the rankings of the nation's largest construction management (as agent) and program/project management firms for nonresidential and multifamily buildings work, as reported in Building Design+Construction's 2022 Giants 400 Report.
Giants 400 | Aug 22, 2022
Top 200 Contractors for 2022
Turner Construction, STO Building Group, Whiting-Turner, and DPR Construction top the ranking of the nation's largest general contractors, CM at risk firms, and design-builders for nonresidential buildings and multifamily buildings work, as reported in Building Design+Construction's 2022 Giants 400 Report.
Giants 400 | Aug 22, 2022
Top 45 Engineering Architecture Firms for 2022
Jacobs, AECOM, WSP, and Burns & McDonnell top the rankings of the nation's largest engineering architecture (EA) firms for nonresidential buildings and multifamily buildings work, as reported in Building Design+Construction's 2022 Giants 400 Report.
Giants 400 | Aug 22, 2022
Top 80 Engineering Firms for 2022
Kimley-Horn, Tetra Tech, Langan, and NV5 head the rankings of the nation's largest engineering firms for nonresidential buildings and multifamily buildings work, as reported in Building Design+Construction's 2022 Giants 400 Report.
| Aug 22, 2022
For Gen Z, “enhanced communication” won’t cut it
As the fastest-growing generation, Generation Z, loosely defined as those born between the mid-1990s and early 2000s, has become a hot topic in conversations surrounding workplace design.
Giants 400 | Aug 21, 2022
Top 110 Architecture/Engineering Firms for 2022
Stantec, HDR, HOK, and Skidmore, Owings & Merrill top the rankings of the nation's largest architecture engineering (AE) firms for nonresidential and multifamily buildings work, as reported in Building Design+Construction's 2022 Giants 400 Report.
Giants 400 | Aug 20, 2022
Top 180 Architecture Firms for 2022
Gensler, Perkins and Will, HKS, and Perkins Eastman top the rankings of the nation's largest architecture firms for nonresidential and multifamily buildings work, as reported in Building Design+Construction's 2022 Giants 400 Report.