Construction Costs, Zoning May Slow Office Sector: Cushman & Wakefield

Written by Patricia Kirk

While new office construction has been robust so far in 2018, next year developers might begin pulling back, according to David Bitner, head of Americas capital markets research with real estate services firm Cushman & Wakefield. He cites rising construction costs, concerns about the end of the real estate cycle and zoning issues as the reasons.

In the first two quarters of 2018, the U.S. office market experienced the influx of 28.8 million sq. ft. of new space, according to Cushman& Wakefield. This was higher than the amount of new space delivered during the same period in 2017. By year-end, new office deliveries should reach 68.4 million sq. ft. “Developers are playing catch up now,” says Bitner. “The last three cycles had a lot more construction relative to inventory.”

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