Despite a slow start to the year in U.S. office market fundamentals, construction activity has returned in the Northeast. From Central New Jersey to Portland, Maine, new construction has reemerged, particularly in the major markets of Manhattan and Boston. Nearly 38 percent of the 48.0 million square feet (msf) currently under construction in U.S. markets are located in the Northeast. The Northeast represents nearly one-quarter of the total U.S. office stock (4.8 billion square feet) tracked by Cushman & Wakefield.
In 2008, U.S. office construction completions totaled 49.6 msf, which was the highest level of new construction completed since 2000. The Northeast comprised 5.1 msf of this figure, just over 10 percent. Over the past two years momentum has increased in the northeast with nearly 3.5 msf of new office space completed which was 63 percent pre-leased. Most of this construction took place in the markets of Boston, New Jersey and Stamford. Boston Properties, Mack Cali and Building & Land Technology represent some of the projects’ developers. During the first quarter of 2013, three build-to-suits were delivered totaling just 320,000 square feet (sf) in New Jersey and Long Island. However, through the balance of 2013, another 6.6 msf will be completed. Nearly half of the construction to be completed this year is comprised of One World Trade Center being developed by The Port Authority of NY/NJ and the Durst Organization which is 55 percent preleased to Conde Nast, China Center and, the U.S. General Services Administration.
Of the nearly 18 msf of space currently under construction in the northeast corridor, 40 percent has been preleased. The 2013 development pipeline represents 2 percent of the existing inventory in the northeast. Some of the more significant projects under way are listed below with Manhattan comprising most of the space under construction (66%), followed by Boston (24%), Central and Northern New Jersey (7%) and Upstate New York (2%).
In total, there is an existing pipeline, including the 18 msf currently under construction, totaling 25.6 msf which is 33% committed to by tenants. These are properties which are either under way or have the proper approvals in place to begin construction and are slated for delivery up to and including December 2016. Ninety-three percent of these properties are located in the major markets of Manhattan and Boston.