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Office leasing improves as construction pipeline shrinks

ConnectCRE says declining construction and fewer sublease options are tightening supply of top-tier space and contributing to falling vacancies and stronger rent growth.

Reported · Written up by our desk · Commercial

After years of uncertainty in the office market, shrinking construction pipelines and improving leasing activity are setting up a more selective office cycle, according to ConnectCRE.

The outlet cites industry reports from Colliers, Cushman & Wakefield, Lee & Associates, JLL, and Plante Moran, saying construction has continued to decline and new starts are limited mostly to select markets with significant preleasing.

With the construction pipeline low by historical standards, ConnectCRE reports that rent growth is starting to move higher while occupancy improves, and available sublease inventory has fallen from its cyclical peak.

ConnectCRE adds that tenants are competing for a smaller supply of high-quality, often Class A, space as overall leasing volume improves but remains depressed in many markets, contributing to falling vacancies even as developers and completions are expected to change in the coming months.

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