The National Observer | Real Estate Edition | March 3 | Will more than 1B square feet of office space become irrelevant?

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Potentially 1.4 billion square feet of office space could be obsolete by 2030, according to a recent analysis by Cushman & Wakefield PLC, although it notes natural vacancy (13% before the pandemic) will result in 330 million square feet of excessive vacant office space by that time.

Another analysis by CoStar Group Inc., per a request by The Business Journals, found about 20,000 office buildings completed before 2014 are at least 25% vacant and comprise about 1.1 billion square feet, or about 13.4%, of total inventory nationally.

• That type of space accounts for 54.2% of the 1.07 billion square feet currently vacant?nationally.
• Tenants in older office buildings, dating before 2014, have given back nearly 300 million square feet in them since the onset of the pandemic, CoStar found.

Abby Corbett, global head of investor insights at Cushman, told me despite the growing obsolescence of some office space, there's potential opportunity for office buildings at risk of becoming irrelevant to be reimagined once the economy strengthens.

Still, while conversions into residential, medical office or labs have become a trendy solution to deal with the growing glut of office space nationally, it's a challenging design, engineering and financial feat to get those projects across the finish line.

Here are other top real estate stories from around the ACBJ network:

1. Office properties across the U.S. are facing loan maturities and financial challenges, including in places like Columbus, Ohio; Atlanta and Baltimore.
2. Bed Bath & Beyond Inc.'s store closures are unlocking opportunity for retailers that've been hard pressed to find junior anchor space in some markets.
3. New York Gov. Kathy Hochul has a goal of building 800,000 homes across the state in the next decade but what policies are being weighed to meet that lofty objective?
4. Commercial real estate firms are having to diversify as dealmaking slows and the needs for commercial space have evolved since the Covid-19 pandemic. Some companies are scaling up and diversifying their businesses through mergers and acquisitions.
5. Are residential developers in Portland findings ways to circumvent inclusionary housing requirements?
6. A $575 million innovation center that'll house Spark Therapeutics Inc.'s gene-therapy expansion has begun construction in Philadelphia.
7. Million-dollar teardowns in Boston's affluent suburbs aren't uncommon these days, but what are the ramifications of the new mega mansions being built in their place?
8. Architecture firms are preparing for a rockier economy as revenue across the industry falls nationally for the fourth consecutive month.

Built by Ashley Fahey, editor of The National Observer: Real Estate. Reach me with tips, questions and feedback at?[email protected]