Newly built office space thrives despite market headwinds
- 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.