Office construction across major U.S. cities is continuing to decline, with developers holding off on new projects unless they can lock in large tenants ahead of time.
At the end of the first quarter of 2025, 20.7 million square feet of office space was under construction in the 14 biggest office markets โ a drop from 24.8 million square feet at the end of 2024, according to real estate firm Colliers. The decrease comes as more projects are being completed than started.
Nearly half of the office space currently being built is expected to open this year, with another 7 million square feet set to be completed in 2026. Only three new projects broke ground in Q1: two in South Florida and one in Chicago.
South Florida, Dallas, and Manhattan are leading construction activity, each with over 2 million square feet underway. Boston, Los Angeles, and the Puget Sound region also have over 1 million square feet in progress, according to BisNow.
However, pre-leasing varies widely. Just 8.2% of South Floridaโs pipeline is pre-leased, compared to 71.6% in Dallas and 90.9% in Manhattan.
The majority of tenants pre-leasing space are in finance, insurance, and real estate โ making up over 60% of the total. Other sectors include consumer goods (1.1M SF), tech (600K SF), and sports/entertainment (508K SF).
This slowdown reflects rising construction costs, tighter lending standards, and softer demand for office space. Lenders are requiring more pre-leases before funding new developments.
Some experts believe the slowdown could benefit high-end office buildings, as more tenants are seeking top-tier โClass Aโ and trophy spaces, potentially helping boost occupancy in a struggling office market.
