New Office Pre-Leasing Above the Norm

Article originally posted on Globe St. on January 22, 2024

Colliers reported positive pre-leasing data on new office properties, with most markets above the average percentage at 46.2% pre-leased and Manhattan coming in first at 83.3% pre-leased.

There are 36.4 million square feet of active construction across the top office markets and most projects are expected to be completed in 2024. Those 79 projects are expected to add 22.7 million square feet of inventory in the top markets.

Urban submarkets account for 59.6% of construction activity in terms of square footage, Colliers reported. “Though by count, urban and suburban submarkets are almost even,” according to the firm.

Activity in the key markets include:

There are currently six projects under construction in Atlanta, totaling 2.5 million square feet, the majority of which are in urban submarkets.

There are currently six projects under construction totaling 2.5 million square feet in Boston, the majority of which are in urban submarkets.

There are three projects under construction in urban submarkets totaling just over 1 million square feet in Chicago and all are speculative.

The 20 under-construction projects totaling 5.8 million square feet in Dallas are located in suburban submarkets. They are predominantly speculative projects.

There are 12 active construction projects totaling 3.3 million square feet in Denver and are all speculative.

There are three projects under construction in Houston, totaling 643,760 square feet. Five projects were completed in H2 2023 totaling nearly 1 million square feet.

Five projects totaling 1.4 million square feet in Los Angeles are currently under construction. All are speculative.

There are three active renovations totaling 2.3 million square feet in Manhattan. The other most prevalent development type is owner/user, which totals 4 million square feet covering four projects.

There are four active construction projects totaling just under one million square feet in Philadelphia. Three projects are in suburban submarkets.

Phoenix’s three active construction projects are in suburban submarkets and two are build-to-suit developments.

Three projects totaling 2.2 million square feet were completed in H2 2023 in Puget Sound, the most of any top market in terms of square feet and were 100% pre-leased. Eleven developments totaling 4.4 million square feet remain under construction.

There were no completions in San Francisco in H2 2023, but a new project did break ground.

There are eight projects under construction in Silicon Valley, totaling 3.4 million square feet. Four are speculative and four are owner/user development types.

South Florida combines Miami, Fort Lauderdale, and Palm Beach markets, and collectively, there are 13 projects totaling 3.5 million square feet of active construction.

There are six projects under construction totaling 1.8 million square feet in Washington DC. Two were completed in H2 2023 and were 68.8% pre-leased.