The 135 million square feet of office space under construction at the end of the third quarter across the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – only modestly exceeds the long-term historical average of 127 million square feet.
Office construction in the U.S. and Philadelphia commercial real estate markets has remained surprisingly aligned with market demand, avoiding the boom and bust cycles seen in 2007, when 187 million square feet was under way; and the whopping 250 million square feet that was under construction in the first three quarters of 2000, according to CoStar Portfolio Strategy data.
This report on national and Philadelphia commercial properties was made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.
Despite healthy office fundamentals, healthy pricing and record rent levels for many U.S. and Philadelphia commercial real estate properties achieved by new assets, “there is surprisingly little development taking place,” said Jeff Myers, managing consultant with CoStar Portfolio Strategy. “The overwhelming majority of metros are adding space at rates below their historical average.”
With this new-found discipline of lenders and developers, office construction has been closely tracking demand and remained well below historical levels since 2011, with less than half as much vacant national and Philadelphia commercial real estate listings available at midyear 2016 versus 2007.
While previous supply peaks from the late 1980s, through the financial crisis of 2007, were marked by heavy speculative construction and dramatic rent spikes, many developers and lenders in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – remain leery about launching “spec” projects.
In fact, some analysts believe overall U.S. and Philadelphia commercial real estate listings involving office construction may be peaking for this cycle, with most projects now underway in a handful high-demand markets slated for delivery in 2017 and 2018.
For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) or Leor Hemo (leor.hemo@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.
Wolf Commercial Real Estate is a Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.
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