New office construction is falling to an all-time low, according to a respected real estate analysis firm, with numbers that are only the latest in a four-year decline.
The report from Chicago-based Jones Lang LaSalle Incorporated is showing that nearly 266,000 square feet of new office building construction had launched during the first quarter of this year.
That may seem like a healthy number, until compared with where the industry was in the first three months of 2020, just as the Covid 19 pandemic broke. Then more than 10.5 million square feet of new office construction was underway.
To put it another way, while there’s some 55 million square feet of new office construction currently in the pipeline, that figure is an incredible 60% below where things stood four years ago.
At the same time, the first quarter of this year saw some 7.7 million square feet of new office space completed, a figure that JLL sees as most likely the “highest level of completions” to be expected for the foreseeable future.
The dearth of new office construction has occurred hand-in-hand with a trend seeing the emptying of existing office space across the country. “The repercussions could extend far beyond the owners of these buildings and their lenders,” the New York Times reported last week.
Noting that a drop in the value of office real estate has the potential of obliterating property tax revenue for cities, the paper added: “Empty and nearly empty office buildings also hurt restaurants and other businesses that served companies and workers who occupied those spaces.”
While the numbers are in every way daunting, the site FastCompany.com points out that concurrently there is a “growing trend of converting existing office space into condos and apartments, which is gradually gaining momentum.”
In fact, the overall rate of office space being used for other purposes jumped in the first quarter of this year by around 50%.
In a move designed to accelerate this latest trend, notes the publication The Hill, state lawmakers across the country are “proposing tax incentives to help make office to residential building conversions more affordable.”
By Garry Boulard
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