- Over 115 million square-feet of office space across the top 40 markets is coming in 2019—a 52% increase over 2018.
- NYC will add almost 16 million square-feet, roughly doubling the amount added in 2018.
The U.S. economy has been on a tear in the last 10 years. Unemployment is at its lowest levels since the 1950s, the S&P is up 362% from 2009 lows, and recent changes in government policies have been very business friendly. Demand for office space has increased, boosted even further by coworking companies like WeWork and Regus that make leasing office space incredibly simple and inexpensive. You’d think that after 10 years of economic expansion that we’d start to see a slowdown, but 2019 looks to expand further. COMMERICALCafé aggregated the office completion data from 2018 and what’s scheduled for 2019 in the most popular 40 office markets in the country based on data from Yardi Matrix, and it tells an interesting story.
75.6 Million Square-Feet in 2018
The top 40 markets in the U.S. added over 75.6 million square-feet of office space in 2018. Of the total completions, 39% occurred in just five markets—NYC, Dallas, the Bay Area, San Francisco, and Washington D.C. That’s more square footage than the bottom 29 metros combined. The largest single addition was Silverstein Properties’ 3 World Trade Center at 2.8 million square-feet.
152% More Square Feet in 2019
115.4 million square-feet of office space is projected to be completed across the top 40 markets in 2019. Washington DC was replaced by Seattle for the 5th position, adding 6.4 million square-feet. Simultaneously, fewer completions meant that less Dallas office space for rent became available during 2019, and the Metroplex dropped to the 4th position from 2nd in 2018. More development is expected this year with almost 40% of the projected office space being added to the top 5 markets. NYC alone will add almost 16 million square-feet—roughly doubling the amount added last year.
2019 is looking to continue this upward trend for office completions. Interest rates have leveled at 4.7%, still lower than 2006 rates of almost 5%, and some projects that have been a long time in the making are coming to completion. Apple Park in Cupertino, CA will bring almost 2.9 million square-feet to the Bay Area and Manhattan’s Hudson Yards is projected to add 2.6 million square-feet.
Looking Beyond 2019
Even with the cost of construction going up, 2019 is already a big year for commercial real estate. Trade tensions are mostly affecting the agricultural, manufacturing, and consumer sectors, while the commercial office space industry continues to climb higher. It will be interesting to see if this trend continues as the Gig Economy grows larger and pulls more and more people out of traditional offices and into more work-from-home or temporary locations.
To view the full report and methodology, click here.