It’s not a surprise, but developers have significantly reduced the amount of office space they are building this year.
According to the latest research from CommercialEdge, only 57.8 million square feet of office space was under construction as of November of this year. The construction pipeline in this sector, then, has shrunk by 39 million square feet year-to-date.
CommercialEdge reported, too, that developers completed only 39.7 million square feet of new office projects this year, while construction crews broke ground on just 9.1 million square feet of new office space.
Need move evidence of the challenges that the office sector faces? According to CommercialEdge, six of the top-25 office markets have recorded year-over-year vacancy increases of more than 500 basis points so far in 2024. Austin, Texas, leads the way, with office vacancy rates 650 basis points higher as of the end of November this year compared with last.
In slightly better news, listing rates have risen. CommercialEdge reported hat the average office listing rate stood at $32.85 a square foot as of the end of November, a jump of 3.7% when compared to the same month a year ago.
Midwestern markets remain the most office across the nation, with asking office rents averaging just $21.56 a square foot in Detroit, $26.37 in the Twin Cities and $27.05 in Chicago.
