Construction Slowdown, Leasing Acceleration Drive Office Demand

An acceleration in office leasing activity is coinciding with a slowdown in deliveries, which is creating a spillover demand in which broader segments of the market are beginning to stabilize and grow, according to JLL’s recent office market dynamics report.

Newer building supply peaked in 2022 with more than 100 million square feet across the country but has declined 25% since then. The buildings that are most competitive with newer supply have benefited from increased demand, including buildings that have been renovated in the past decade and historical buildings with unique features or architectural significance, said the report. Highly amenitized buildings in central business district markets gained nearly two million square feet of occupancy in 2024 regardless of their age. Availability in mixed-use neighborhoods and transit-oriented notes also has been on the decline.