Phoenix among the most active office markets in the U.S.

Above: Amazon leased 93,000 square feet at 100 S. Mill Ave. in Tempe. Amazon earned a 2021 Impact Award. Real Estate | 1 Apr |

The 2010s will be remembered as a period of all-round economic growth, including in office construction. In particular, the last decade set the stage for several landmark office building projects, from the glitz of One World Trade Center and Hudson Yards to the sprawling corporate hubs in tech corridors.

However, COVID-19 brought unprecedented change to the office market and its construction projects, and the office pipeline was doubly challenged by the pandemic. First, stay-at-home orders meant that, in many states, construction was temporarily halted. Then, working from home became widespread and, even now, a return to the office seems still distant for many.


READ ALSO: Ranking Arizona: Top 10 brokerage firms for 2021


As a result, many companies are reevaluating their office space leases, which will inevitably manifest in office building construction. So, we looked at data provided by CommercialEdge on the amount of office space in the pipeline for 2021 and beyond, as well as the largest office building completions in 2020. And, what we found is that, while Manhattan was home to the largest office building completed last year, it may soon be overtaken in deliveries by other markets — at least in the short-term.

LA Takes 1st Place for 2021 Office Deliveries, Manhattan Boasts Largest Total Pipeline

 

Los Angeles will see 6.85 million square feet of office space delivered this year. This means that the Los Angeles office market will see the most new office space in 2021.

Also on the podium are the Boston office market — with 6.6 million square feet scheduled for delivery — and San Francisco with an additional 5.7 million. With that, all metros in the top three are well-established office markets.

However, the cities in #4 and #5 — Austin and Charlotte — are in a new class of office market defined by strong in-migration from other metros and robust investment from tech and finance companies. As a result, Austin has 4.75 million square feet in the pipeline for 2021, while Charlotte has 4.1 million — considerable increases relative to their current inventories.

Meanwhile, Manhattan has 4.1 million square feet of office space set to be delivered this year, placing the borough in the #6 spot. However, if we take into account all of the scheduled 2021 office deliveries for New York City’s boroughs, the total square footage of NYC office space to be delivered outpaces Los Angeles.

Additionally, when considering all office building construction — regardless of projected completion dates (which can be viewed in the second tab of the table above) — Manhattan wins by a large margin. In fact, there is 18.9 million square feet of Manhattan office space currently in the works, followed by Boston’s 13.7 million and LA’s 9 million.

Phase II of State Farm at Park Center Projected to be 2021’s Biggest Delivery


Although Los Angeles is expected to see the most office square footage added in 2021, the biggest office delivery in a single project is actually situated in metro Atlanta in the suburb of Dunwoody, Georgia.

State Farm at Park Center — one of the three regional hubs planned by the insurance company — was split into two phases. Phase I was completed in 2016, and Phase II — comprising buildings 2 and 3 of the complex — is expected to add 1.75 million square feet of office space in Atlanta. The corporate office building was designed with attention to walkability, public transportation options, and ease of access to dining and shopping options.

Of the 3.6 million square feet to be delivered in Houston in 2021, 1.1 million will be from a single property — Texas Tower, the second-largest office building in the pipeline for this year. Also known as T2, the property will feature double-height ceiling in the grand lobby, rooftop gardens and a huge mezzanine upon its completion which is scheduled for Q4 2021. Situated on the 800 block of Texas Avenue, T2 is a demonstration of green design and ease of access in the center of a growing office market.

One Vanderbilt is 2020’s Biggest Office Construction, 110 North Wacker Adds 1.5M Square Feet of Office Space to Chicago Market


Upon its long-awaited opening on September 14, 2020, the 1.75-million-square-foot One Vanderbilt became a hallmark of the revitalization of the Midtown Manhattan office market, a model of green architecture and a symbol of New York City’s resilience. Opening its doors in the middle of a pandemic, the 1,401-foot-tall office building also got attention for being the first supertall, state-of-the-art Manhattan skyscraper outside of Hudson Yards in several years.

And, despite remote work being the norm, One Vanderbilt wasn’t short on tenants: Owner SL Green Realty had a goal of 82% occupancy by the end of 2020, and just narrowly missed its target after two January 2021 leases brought occupancy up to 73%.

The second-largest office building completed in 2020 is situated in the birthplace of the skyscraper — Chicago. The property at 110 North Wacker Drive — also called the Bank of America Tower — added 1.5 million square feet of Chicago office space upon its opening in October of last year. The property, which is located by the Chicago River, is the result of a collaboration between the Howard Hughes Corporation and Riverside Investment & Development. Notably, its unique, sawtooth-pattern on the façade toward the river accentuates the transparency of its low-iron glass.

The next-largest office completion of the last year takes us back to New York City, but not to Midtown. The third-biggest office building delivered in 2020 was The Jacx, a project totaling 1.2 million square feet of office space in Queens’ Long Island City neighborhood.

So, while Manhattan saw the biggest office building delivery in 2020, the numbers hint toward a temporary slowdown in new inventory being added to the nation’s biggest office market. In this time window, more office space may be added to other competitive markets such as Atlanta and Los Angeles, which are also set to receive the biggest office property completions of 2021.

Methodology

  • All data used in this project is courtesy of CommercialEdge.
  • Data on market square footage and individual buildings was extracted on March 16, 2021.
  • Only office buildings larger than 25,000 square feet were considered. Mixed-use buildings were also included.
  • For the market ranking, we only considered buildings larger than 25,000 square feet that were not owner-occupied.
  • Square footages for the 2021 pipeline, as well as the buildings included in the 2021 ranking, are based on the projected completion date of each building. Final opening dates may differ.
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