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Construction Slowdown Expected to Relieve Office Sector’s Rising Vacancies
Long-term relief for the U.S. office market will come in the form of constrained new supply, CBRE reported. CBRE’s Econometric Advisors division forecasts construction completions slowing to a quarterly average of four million square feet from mid-2024 through 2028, roughly 37% of the historical quarterly average.
“The impending construction slowdown in the office sector is similar to what the retail sector went through in the past decade,” said Manish Kashyap, CBRE global president of advisory & transaction services. “Retail construction has tapered since the Great Financial Crisis, spurring vacancies to gradually decline to a record low of 4.8% in this year’s first quarter. As a result, retail rents continue to rise. It is a multiyear shift that might foreshadow what’s in store for the office market.”
U.S. office vacancy will peak between 19.3% and 21.4% in late 2024 and then gradually decline to roughly 16% by 2028, CBRE projected.
- ◦Lease
- ◦Development
