78 Million Square Feet of New Office Will Come Along at an Opportune Time
Among the bright spots of May’s surprisingly strong jobs report was the gain of 464,000 positions in construction employment. This surge in construction jobs should continue as building sites reopen and housing permits increase, CBRE says. However, there’s also a potential disconnect here.
“The construction industry’s resurgence draws attention to the 78 million square feet of new office space currently under construction in the top 10 U.S. markets for new development at a time when the future of the office is under debate,” according to CBRE. It’s reasonable to ask whether all that office development is a problem.
Generally speaking, the answer is no. CBRE notes that the total office inventory of the U.S. is 4.5 billion square feet, approximately 68 million square feet of which comes to the end of its useful life every year.
“Most of the new supply is built on sites previously occupied by older buildings,” according to CBRE’s Richard Barkham, Spencer Levy and Julie Whelan. “The creation of great new workplaces is a major benefit for America’s 22 million office workers, particularly at a time when wellness in the workplace is top of mind.”
Leading the way for new office construction is Manhattan, where 12.5 million square feet is slated for delivery in the next three years. Not too far behind, though, is San Jose, with 10.2 million square feet under construction and slightly more pre-leased space (about 6.9 million square feet, compared to 6.8 million square feet in Manhattan).
Ranking third is another East Coast market: greater Washington, DC, with 8.4 million square feet, followed by Los Angeles, which is undergoing the largest expansion of its office inventory since the 1980s. The 8.3 million square feet of space under construction comprises 2.2% of the greater metropolitan area’s total inventory.
Also at the highest level in decades is office construction in Boston, with most of the 7.3 million square feet under development in the region centered in the city itself and Cambridge. Another market where new office product is concentrated is the Chicago metro area, with 6.7 million of the 7.2 million square feet now being built is clustered in the CBD.
Two tech hubs, Austin and Seattle, rank seventh and eighth in the top 10 at 6.9 million and 6.8 million square feet, respectively. Rounding out the top 10 are Dallas, with a relatively low total of 5.9 million square feet, and San Francisco with 4.3 million square feet. Another six million square feet of office has been approved by the city but hasn’t launched construction yet.
For comments, questions or concerns, please contact Paul Bubny
- ◦Development
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