Third Quarter 2022 CommercialEdge Desktop Report

CommercialEdge has released its National Office Report for October, once again highlighting the re-emergence of coworking spaces as a magnet for tenants, developers and investors. As confirmed by a recent survey conducted by BOMA, corporate office users report a preference for shorter rental terms and more flexible workspace arrangements, which will allow them to quickly adjust their footprint to suit of their needs.

However, despite expressing a positive view of the future of coworking, only 17% of U.S. tenants had a significant share of flex space in their real estate portfolios at the time, according to a CBRE survey. That said, the same report noted that 59% of tenants expected coworking to make significant gains within their respective portfolios over the next two years.

What’s more, the popularity of flexible spaces isn’t limited to C-suite decision makers: a joint survey by WeWork and Cushman & Wakefield found that employees also want to spend more time working in these shared spaces. As a result, real estate brokers are taking steps to ride this future wave by increasing their investments in coworking. For example, CBRE injected $100 million into shared space operator Industrious – this after already investing $200 million in 2021.

Likewise, established coworking operators such as IWG are also looking to grow their inventory. The parent company of Regus and Spaces will add at least 500 new US locations to its roster, mostly in suburbs and small towns. In fact, IWG already has more than 1,000 coworking locations in the markets covered by CommercialEdge. Its second, WeWork, has more than 250 spaces.

46.6 million square feet of office space under construction in Q3 2022

CommercialEdge has recorded approximately 139.1 million square feet of new office space currently under construction in the United States

Before the pandemic, office starts regularly hovered around 80 million square feet. Although the rate of new projects under construction has not yet reached its pre-pandemic pace, the shortfall has not been as severe as expected: specifically, 2021 produced 62.2 million square feet of starts. under construction, while the first three quarters of this year already total 46.6 million.

Meanwhile, office supply under construction has increased in some Sun Belt markets, such as Austin, where it has grown from 5.1 million square feet in 2019 to 5.8 million this year. Housing starts in other cities in this region that also had high levels of immigration remained largely unchanged.

$13 billion added to U.S. office sales volume in third quarter

In the first three quarters of 2022, national office sales volume totaled $69.3 billion. It was led by Manhattan with total transactions reaching $5.45 billion. Overall, office sales in the third quarter fell $6 billion from the previous three months and were halved from the totals achieved in the previous two years.

The Washington, DC market was the second largest contributor. Its sales of $4.1 billion were close to the pre-pandemic mark of $4.5 billion. The most expensive transaction in the Washington, DC market to date was at 601 Massachusetts Ave. NW – a 478,818 square foot property located in the Seventh Street Corridor. Completed in 2015 by Boston Properties, it was acquired by Mori Trust in August for $513 million – the largest sale by total cost and price per square foot ($1,109).

For more highlights, read CommercialEdge’s full report. Do you need a reliable and up-to-date listings platform that gives you access to the most sought-after coworking solutions in major cities across the United States? Simply sort properties by location, size or price to find the one that best suits your business:

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Last modification: October 19, 2022

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Amanda J. Marsh