At a time when employers are struggling to find talent in the tight labor market, more than 60% of new office product slated to come online in 2018 and 2019 has been pre-leased.
CBRE reports more than half of that new construction is concentrated within the top 10 markets in the country, and 80% of the supply under construction in Boston, Philadelphia and San Francisco has already been pre-leased.
Office construction, though still robust, has remained slow coming out of the recession. CBRE estimates supply levels will drop significantly to 47M SF from the year prior when construction peaked at 61M SF, according to CBRE. That slowdown has boded well for the sector considering office-using job growth is expected to slow net absorption this year to 32.1M SF from 50.1M SF in 2017.
“As the real estate cycle progresses through moments of increased construction, there is always concern that markets will get overbuilt or will not actually answer the demands of tenants. These findings put those concerns at rest and show the overall health of the office-using market,” CBRE Americas President of Advisory and Transaction Services Scott Marshall said.