Manhattan, Boston and Atlanta lead the way for office space under construction, according to a new report from CommercialCafe, with more than 10 million square feet on track to deliver in each city in the near future.
Austin snagged the #3 spot on the list, with roughly 7.7 million square feet in the pipeline, followed by Dallas with 7.5 million square feet and the Bay Area, San Francisco, Seattle; and Washington, D.C. all trailing with more than 5 million square feet of office space in their respective pipelines.
As of Q1 2023, about 135 million square feet of office space was under construction across 25 major US markets, while Austin snagged the top spot in terms of the share of new office developments within the overall inventory at 8.7%. The Texas city is followed by Atlanta and Charlotte; approximately 6.3% of the current stock in both cities are made up of new office projects.
“But, when looking at actual square footages, there’s an important difference between the two: At 12.4 million square feet in the pipeline, Atlanta has nearly three times as much construction activity as the North Carolina city,” the report notes. “Yet, when you consider the size of some of these projects, it’s actually Charlotte that rises to the top: Two of its entries are on the list of top 20 largest office spaces under construction, whereas none of the buildings currently being developed in Atlanta come in above the 600,000-square-foot mark.”
Nashville, Boston, and San Diego are also on track to see expansions of more than 5% in 2023, with Boston expected to deliver 12.4 million square feet of new office space to the market including One Post Office Square.
Meanwhile, New York City topped the list of the 20 largest office deliveries of 2023, with five projects above 1 million square feet. The five biggest office projects on CommercialCafe’s watchlist are all in NYC, led by Brookfield Properties’ 2-million-square-foot Two Manhattan West and Vornado’s PENN 2 redevelopment, which is slated for delivery by year-end.
And in the Seattle area, the the 995,000-square-foot 555 Tower in Bellevue “is currently in somewhat of a development limbo,” according to CommercialCafe, in the wake of Amazon pausing construction on several ongoing office projects in the region.
The data indicates that tenants are continuing their flight to quality assets in prime locations, even as office foot traffic remains muted. Office visits remain about 60% of what they were before the COVID-19 pandemic, according to Placer.ai. Just three cities – New York, Miami, and Los Angeles — saw overall visit gaps shrink by more than 1% in January compared to Q4 2022.