By Cameron Williams, Director of Research, SVN International Corp.

Continued uneasiness surrounding demand as well as record setting vacancies have created a downturn in new office development in the beginning of 2023. Despite this, several markets are continuing to build.

With much of the space pre-leased, tenants are still signaling the demand for high quality property outside of central business districts. Life science lab space and class A suburban property are driving new construction in the following markets:

 

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Key Takeaways

Despite high office vacancies and economic uncertainty, new office construction is continuing in select markets — particularly where pre‑leasing and specialized demand (like suburban Class A and life‑science space) signal ongoing developer confidence even as broader conditions remain challenging.

What’s happening with office construction:

  • Supply challenges persist — Overall new office development has slowed due to record vacancy and weak overall demand, yet projects with strong pre‑leased commitments keep moving forward.
  • Macro headwinds — Elevated interest rates, high construction costs, and lingering post‑pandemic uncertainty continue to dampen speculative starts.
  • Regional and sector nuance — Activity persists in regions where demand and pre‑leasing justify new projects, and adaptive reuse may provide alternative strategies.