Top 5 Markets for Office Construction Activity
- May 11, 2021
More than 25 million square feet of office space came online in the first quarter of 2021, with an additional 215.8 million square feet underway across the entire U.S., according to CommercialEdge data. As of March, development activity in the nation’s tech-driven hubs—Manhattan, Boston and Seattle—accounted for a third of the country’s existing inventory.
Half of the upcoming projects are expected to come online in 2021. Meanwhile, developers are reaching new milestones on the largest projects underway. Although most developments are scheduled for delivery on time, a slowdown in office construction is expected—a recent American Institute of Architects consensus forecast predicted a 9.3 percent decrease for office construction spending in 2021.
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5. Bay Area
More than 9.3 million square feet of office space was underway in the Bay Area at the end of the first quarter. Development activity was concentrated in the San Jose CBD, where five properties totaling more than 3.3 million square feet—representing 36 percent of the active pipeline—are taking shape.
The largest office asset underway in the metro is Adobe North Tower, a 1.3 million-square-foot building developed by Adobe Systems. Scheduled for completion in the summer of 2022, the project is designed to meet LEED Gold standards and represents the fourth tower within the tech giant’s global headquarters in downtown San Jose.
4. Los Angeles
Despite rigorous shelter-in-place orders, Los Angeles continues to expand its new stock at a rapid pace, with close to 10.2 million square feet of office space underway as of March. Developers focused on upscale projects concentrated in the Los Angeles CBD, where more than a third of the pipeline is concentrated—or more than 2.7 million square feet of office space.
The submarket will house the largest assets under construction, including Brookfield Properties’ California Market Center, a 1.3 million-square-foot, two-phase asset comprising 1.1 million square feet of office and 139,663 square feet of retail. The second-largest asset underway is Waterbridge Capital’s 801 Broadway. These two properties account for 80 percent of the submarket’s active pipeline.
Construction activity hasn’t lost steam in Seattle, where more than 12.1 million square feet of office space was under construction as of March. Home to giants such as Microsoft, Google, Amazon and Facebook, Seattle stayed afloat thanks to the sector’s strength and work-from-anywhere policies.
Bellevue, where nearly a third of the active pipeline is concentrated—4.6 million square feet—led the way in development activity. Eight projects are taking shape in the city, which will also house Amazon’s Bellevue 600. Phase I consists of a 1.1 million-square-foot, 43-story property near the Bellevue Transit Center and the future Link light rail station. At 600 feet, the tower will be the tallest building in Bellevue and the tallest to be built by Amazon.
By the end of March, developers were working on some 16.6 million square feet of office space throughout the metro. Although the health crisis has left many companies wondering about the future of office footprints, Boston’s strong biotech sector went on adding new jobs despite pandemic-induced concerns.
Cambridge—where homegrown company Moderna emerged as one of the frontrunners in vaccine development—was the metro’s most active submarket in terms of office construction activity. With more than 4.1 million square feet of space under construction, the innovation cluster will house DivcoWest’s Cambridge Crossing, a 43-acre mixed-use development rising in East Cambridge, as well as three office and research buildings currently being developed by MIT Investment Management Co.
The borough has maintained its status as the epicenter of office development, having almost 22 million square feet under construction at the end of the first quarter. Activity remained concentrated in the Chelsea submarket, where more than 8 million square feet was underway, including three properties expected to come online by year-end.
The largest project underway was Mitsui Fudosan America’s 50 Hudson Yards. Upon completion, scheduled for the first quarter of 2022, the 2.9 million-square-foot asset will include 50,000 square feet of retail space and an on-site auditorium. Additionally, the development will be New York City’s fourth-largest office tower.