Good news for the future of office furniture - the office construction segment in several U.S. cities shows no signs of slowing down, according to Commercial Café's Fall–Winter 2017 office pipeline report, and is on track to deliver almost 48 million square feet of new space by the end of the year. That's a boatload of furniture.
As fall arrives, the imminent arrival of the colder months of the year is also fueling office construction in the U.S. Developers are picking up the pace, trying to meet delivery schedules and complete their projects before the year comes to an end. Demand for bigger and better office developments is high, as companies continue to expand and increase their payrolls in sought-after markets like Manhattan or the Bay Area. Various large office projects are currently underway all across the country, so we thought the change in seasons was the perfect time to check in on what’s happening on the U.S. office construction market.
The final leg of the year looks promising: 215 buildings with over 50,000 square feet are scheduled for delivery over the fall and winter months, amounting to nearly 48 million square feet of brand new office space. Unsurprisingly, the most attractive markets for new construction are also the most expensive: New York City and California.
The Bay Area continues to draw in technology companies, and is home to some of the largest names in the world today–Apple, Google, Facebook and Oracle are just a few of the tech giants based on the West Coast. New York City, one of the most expensive office markets in the world, reigns supreme as the primary target for investment in the country. Other markets such as Dallas and Seattle are also rising through the ranks, with various new projects scheduled for delivery by year-end 2017.
To get a better picture of what’s to come over these next four months, we compiled a list of the top 20 cities poised to accrue the most office completions by the end of the year. New York City, alongside California–and the Bay Area in particular, are likely to steal the spotlight in terms of deliveries through December. We’ve also put together a round-up of the 10 largest office projects set to come online in these next four months. Check out the lists below and scroll down for some market highlights:
The top market for office construction for the fall and winter seasons is–drum roll–New York City. It shouldn’t come as a shock that the Big Apple continues to reign supreme as the main target for office investors in the U.S., since it boasts some of the highest prices in the world and local and offshore investors battle for a chance to own a slice of this prime office market. Another interesting fact to note is that our analysis only included the Manhattan and Brooklyn office pipelines, and yet the city still managed to land the top spot, with 15 buildings totaling 5.2 million square feet of space currently underway.
The largest new Manhattan office project scheduled to come online during the last part of 2017 is the 768,000-square-foot One SoHo Square. Located at 233 Spring St. in Manhattan’s Hudson Square submarket, the 13- and 15-story high-rise is owned by Stellar Management and includes 20,000 square feet of retail space. Completion is scheduled in September.
The California office scene will be one of the busiest markets for new deliveries over the next months, taking eight spots on our top 20 list. While the city of Irvine, Calif., managed to land Orange County the sixth position on the list, and Los Angeles closed the list at number 20, the Bay Area made the cut a total of six times. The second spot on our list is occupied by San Francisco, where eight buildings totaling 3.7 million square feet of office space are scheduled for delivery over the last four months of 2017.
The largest project currently underway in San Francisco is the 1.4-million-square-foot Salesforce Tower, scheduled for delivery in October. The 61-story high-rise located at 415 Mission St. is owned by Boston Properties and hopes to earn LEED Platinum certification. A number of high-profile tenants have already committed to space in the tower, including Salesforce, Accenture, CBRE and Bain & Co. Upon completion, the Salesforce Tower will also feature 10,400 square feet of retail space.
Cupertino, Calif., which occupies the fourth spot on our list, is getting ready to welcome the 2.9-million-square-foot Apple Park campus at 10955 Tantau Ave. in the fall. Tech giant Apple’s new ‘spaceship’ corporate campus has been in the works since 2014, and will be the crown jewel of the tech-heavy Bay Area market upon completion.
Insight
At the end of last year, Dodge Data & Analytics predicted that office starts in 2017 would increase 10% from 2016 and add 110 million square feet of new space. According to JLL, 16 million square feet of office space was delivered in the first quarter of this year, and nearly 12 million new square feet came online in the second quarter. When combined with Commercial Café's projections through the end of the year, the volume of new space added, albeit impressive, falls short of Dodge's forecast.
The growing millennial workforce has inspired a number of significant changes in the way offices are designed. Collaborative and open spaces are being incorporated in place of the traditional cubicles and private offices. Building owners have also started to offer out-of-the-box amenities like emergency daycare, food delivery and medical visits in order to appeal to the new workforce.
One of the beneficiaries of this trend is coworking company WeWork. Its shared workspace concept and office layout has won so many fans that the company has branched out into the construction and design businesses and now can deliver the same kinds of spaces, along with office-management services, to enterprise clients like IBM.