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Availabilities in new office construction around the U.S. significantly constrained through 2020.

  • ​Low interest rates, ongoing economic expansion, and tenant demand for modern office space have fueled significant new office construction during this market cycle. Nationally, 57.8 million square feet delivered in 2017, with 2018 set to see a similar volume of new square feet constructed. As this new supply has put a bit of upward pressure on vacancy in central business districts, slowing rental rate growth, the construction pipeline has thinned beyond 2018, with only about 25 million square feet set to deliver in 2019, the lowest volume of deliveries since 2014.

  • What’s a large occupier to do? While build-to-suits are certainly a strong option in many CBDs, it is unlikely that a building of any scale could be completed before 2021, even if it kicked off today. Looking at projects underway that are set to deliver in the next 2.5 years, a large occupier faces substantially constrained CBD options in all but the largest markets, namely New York and Washington, DC. While New York and DC are set to deliver six million and 3.2 million square feet of available new office space by the end of 2020, respectively, it is unlikely that this space will remain on the market for long due to ongoing economic and occupancy growth. Large occupiers will need to bide their time for new options to get started, but it will be a long time before they will have new buildings ​​

Source: JLL Research

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