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
Market Data | Apr 14, 2022
FMI 2022 construction spending forecast: 7% growth despite economic turmoil
Growth will be offset by inflation, supply chain snarls, a shortage of workers, project delays, and economic turmoil caused by international events such as the Russia-Ukraine war.
AEC Tech | Apr 13, 2022
A robot automates elevator installation
Schindler—which manufactures and installs elevators, escalators, and moving walkways—has created a robot called R.I.S.E. (robotic installation system for elevators) to help install lifts in high-rise buildings.
Office Buildings | Apr 11, 2022
SOM-designed office tower aims to promote health and wellness
Skidmore, Owings & Merrill (SOM) recently completed work on 800 Fulton Market, a new mixed-use office building in Chicago’s historic Fulton Market/West Loop neighborhood.
Projects | Apr 6, 2022
Ryan Companies expands Chicago presence with new West Loop office
Ryan Companies US, Inc. (Ryan), a national leader in commercial real estate services, announces it has enhanced its Chicago presence with the opening of a new downtown office at 224 North Desplaines in the city’s West Loop neighborhood.
Airports | Apr 4, 2022
Dominican Republic airport expansion will add mixed-use features
The recently revealed design concept for the expansion of Santiago International Airport in the Dominican Republic includes a transformation of the current building into a mixed-use space that features an office park, business center, and hotel.
Codes and Standards | Mar 23, 2022
High office vacancies have cities rethinking downtown zoning
As record-high office vacancies persist in U.S. urban areas, cities are rethinking zoning policy.
Projects | Mar 22, 2022
Fast-growing Austin adds a $3 billion community
The nation’s fastest-growing large metro area is getting even bigger, with the addition of a $3 billion, 66-acre community.
Projects | Mar 18, 2022
Former department store transformed into 1 million sf mixed-use complex
Sibley Square, a giant mixed-use complex project that transformed a nearly derelict former department store was recently completed in Rochester, N.Y.
Projects | Mar 17, 2022
Plans unveiled for ‘Wall Street South’ mixed-use office block in West Palm Beach
Brand Atlantic Real Estate Partners, Wheelock Street Capital, and B+H Architects released design plans for a new mixed-use office block in West Palm Beach called Banyan & Olive.
Projects | Mar 10, 2022
Optometrist office takes new approach to ‘doc-in-a-box’ design
In recent decades, franchises have taken over the optometry services and optical sales market. This trend has spawned a commodity-type approach to design of office and retail sales space.
