Newly built office space thrives despite market headwinds

February 28, 2023
  • Jacob Rowden
  • Elena Lanning
  • As tenants continue to target best-in-class assets, office buildings delivered within the past three years are not only outperforming the broader market but are dramatically outperforming relative to previous cycles.

  • Offices that delivered during the pandemic have seen an especially large performance spread: properties built between 2020-2022 average nearly 10% lower availability than offices built between 2008-2010 did during the last cycle.

  • Manhattan and other gateway markets are particularly large contributors to new construction outperformance. 6.6 million s.f. of new office delivered in New York during 2022, and by year-end just 22 percent of that space remained available. That momentum is continuing in 2023, with Brookfield’s Two Manhattan West completing in January nearly 80% leased upon delivery.

  • The overall spread in availability between office assets delivered within the past 5 years and the broader market average has widened to 12.5 percentage points, underscoring today’s highly bifurcated market conditions.