This second report in our multi-part series on office construction looks beyond conventional metrics like rent growth to determine when and where to build, and explores new trends affecting the office construction industry.
• Office construction remains muted relative to prior cycles and has been largely concentrated in gateway markets, as well as those with tech- or energy-driven economies.
• As a share of existing stock, the amount of space under construction is highest in the tech epicenters of San Jose, San Francisco and Seattle, as well as in fast-growing Nashville and Salt Lake City.
• The pace of growth in office rents and construction costs during the current cycle significantly impacts construction activity, although there are multiple markets with sizeable construction pipelines despite muted rent growth or high costs.
• Technological advancements and flexible working are reducing the required square footage per employee as well as driving the construction of buildings capable of handling increased densities.