At today’s preleasing rates, there will be no availability in the pipeline by YE 2028

With the pipeline declining dramatically in recent years, but resilient demand from occupiers targeting new space, availability in the development pipeline could all but vanish over the next four years – at current rates of preleasing and in the absence of an uptick in groundbreakings, there would be less than 100,000 s.f. available by the end of 2028.

Some high-demand pockets are increasingly justifying new construction through high occupancy rates and strong rent growth—Boston Properties recently announced a 320,000-s.f. new development in downtown Washington, DC after securing an anchor tenant for the top half of the building. Still, this will only add 160,000 s.f. of available space to the pipeline and is expected to deliver in the second half of 2028.

Even with selective pockets supporting new construction, the signs of a broader acceleration in development are elusive: office investment sales volume, which typically provides an early indicator of groundbreaking volume, has yet to accelerate in a way consistent with the recovery during the GFC slowdown, and interest rate expectations are increasing amid a resurgence in inflation.

Actual preleasing rates and pipeline availability will not decline at a linear rate over the next four years – some markets may see limited amounts of speculative development begin by 2028, giving some relief to the pipeline, and preleasing volumes will naturally decline as remaining spaces become more limited. Still, the 11.1 million s.f. available in today’s pipeline represents a stark decline from a pipeline of more than 65 million s.f. available just five years ago, and tenants focusing on high-end space will face considerably more competition for limited options.