Developers are building more office buildings today than at any point in the last decade, but the changing nature of the work could threaten long-held beliefs about the way the office market will behave as we enter the next decade.

The office construction pipeline in the U.S. at the end of the third quarter was 118.5M SF, the highest point it has reached in this economic cycle, according to JLL. All the while, the number of U.S. workers who actually report to an office — and the average space they occupy when they get there — is dwindling.

Experts ascribe the reasons for the seemingly illogical divergence in office supply and demand — a gap that figures to widen — to a host of reasons, but they all come back to one connecting factor: the millennial worker.

Millennial workers, the thinking goes, want warm, attractive offices replete with amenities. When they don’t get it, they work somewhere else — from home, a coffee shop or another company’s office.

That’s why office construction is continuing at such a fevered pitch: only the newest buildings have been deemed good enough to get companies to sign long-term leases. Most of the nearly 120M SF of offices being built today already have some future tenants committed to move in when they open up.

The question for the future is: What happens to the buildings they leave behind?

“That means hard times [are] ahead for commercial real estate,” said Diane Mulcahy, a consultant, lecturer and author of the 2016 book The Gig Economy. "The traditional office model doesn’t really meet the needs of today’s workforce."

By and large, America’s office stock is evenly split between prime offices and more affordable space. As of 2019, there was 2.8B SF of Class-A office space and 2.57B SF of Class-B space, according to data compiled by Transwestern.

Vacancies in both have also trended close together since 2010, with Class-A seeing 13.5% and Class-B at 11.5%. Corporate office demand is where the stark difference becomes apparent.

Absorption from 2010 to 2019 — the amount of space leased by companies against what they vacated combined with new supply — was nearly 265M SF, eight times the absorption rate of Class-B space for that same period, according to Transwestern data.