Office Construction Backs Down a Bit but Continues to Expand
Although office construction has backed off a bit — after posting a 21% growth rate in 2014, the current 15% growth rate for 2015 continues to show there is still steam in this market sector. FMI expects this growth to carry over into 2016 and beyond, but at a bit of a slower rate.
Continued growth in the technical sector and in larger metropolitan areas like New York City will keep rents and absorption of new space high. According to the National Association of Realtors, “office vacancies are expected to drop below 15% by the end of this year.” JLL’s “Office Investment Outlook, Q2 2015” reports, “Leasing activity surges as scientific and technical companies continue to grow. More than 40% of all office leases 20,000 square feet and larger are exhibiting growth this quarter.” The Chicago Real Estate Daily reports that in Chicago, “the so-called TAMI sector — technology, advertising, media and information” — is helping to replace “tenants, like law firms, that have traditionally been the biggest users of office space.” (June 29, 2015)
The convergence of millennials with college degrees in scientific and technical fields with the companies seeking to employ them is occurring in major cities on the West Coast and other areas around the country. This will create new opportunities and help to drive changes to cities willing to modernize and focus on areas like green construction, walkable areas, and cleaner air.
(opening photo: unkas_photo/collection/Thinkstock)
