Suburban submarkets now account for 47% of national flex office space, up three percentage points over the past year.
Tech hubs have been among the hardest hit, with vacancy rates in San Francisco surging 510 basis points, the Bay Area up 350 basis points, and Seattle rising 390 basis points over the last 12 months. Finance centers like Dallas (up 510 bps) and Charlotte (310 bps) have also seen substantial increases. Even Boston’s in-demand life sciences market logged a 290 basis point vacancy jump.
Read next: Are construction loans part of your toolkit?
Meanwhile, new office construction has slammed the brakes nationwide. Only 87.9 million square feet were under construction as of March, just 1.3% of existing stock and nearly 40% below the pipeline two years ago. After averaging 64 million square feet annually from 2020-2022, office starts plunged to 44.1 million square feet last year and just 2.8 million through Q1 2024 amid falling demand, rising costs, and tighter lending standards
“The office stock currently under construction is vastly concentrated in the largest markets,” the report stated, with Boston alone accounting for over 15% and the top 10 markets comprising 56% of the national pipeline.
Source: mpamag.com