Economy Watch: Most Office Space Under Construction Already Preleased

More than half of new construction is preleased in all but one of the top-10 markets for construction activity, according to CBRE's latest MarketFlash report.

Source: CBRE U.S. MarketFlash, February 2018
Source: CBRE U.S. MarketFlash, February 2018

Nearly 60 percent of new U.S. office construction due for delivery in 2018 and 2019 is already pre-leased, emphasizing the strong demand for new, efficient buildings, according to a new MarketFlash report by CBRE. In fact, the report said, more than half of new office construction is preleased in all but one of the top 10 markets for construction activity.

So intense is the demand for office space in some places that several markets may face near-term shortages of available new space. For instance, more than 80 percent of space slated for delivery in Boston, Philadelphia and San Francisco this year is already preleased.

Of the space slated to come on line in 2018, about 57 percent of the total—about 43 million square feet—is preleased. Of the 22 million or so square feet of office space coming on line in 2019, 58 percent is leased, according to CBRE.

The data covers buildings underway in the 20 largest U.S. metro markets. More than 11 million square feet are projected to be completed in Manhattan between 2018 and 2022, with some 56 percent already taken. In San Francisco, 61 percent of the more than 10 million square to be delivered by 2022 is taken. At the other end of the spectrum, only 41 percent of the more than 4 million square feet to be delivered during that period in Dallas-Fort Worth is preleased.