Snapshots

Most markets see significantly lower vacancy in new supply

July 30, 2024

Contributors:

As the development pipeline has slowed dramatically amid higher interest rates, the market for high-end space is quickly tightening under a lack of new deliveries—leaving most markets with a considerable spread between overall vacancy rates and vacancy rates in newer buildings.

42 of JLL’s 54 tracked markets saw vacancy rates in newer product decline in the past quarter, and nationally the average vacancy rate for product delivered between 2015-2023 has declined 170 basis points in the past six months.

While markets still post a wide spread of vacancy rates in new supply, 22 markets including New York, Seattle, Silicon Valley and Houston have direct vacancy rates under 10% for newer buildings. The only markets with higher vacancy rates in new construction are the most development-intensive markets in the last cycle.

Although tenants continue to downsize portfolios, overall vacancy rates are expected peak by early-to-mid-2025, when a continued demand recovery and more demolitions and conversions bring supply and demand into better alignment. Newer buildings have generated an elevated share of leasing activity throughout the pandemic and are expected to lead the vacancy recovery in the broader market.

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