Construction of new office buildings is slowing, thanks to inflation, higher interest rates and lower demand for office space. With office values down, banks are also less likely to finance construction of new buildings.
The change is especially pronounced in Chicago, which had nine operating cranes in August, down from 29 in February 2020, according to Rider Levett Bucknall, a construction advisory company. Manhattan will see a count this month and it is expected to show an even bigger drop, said Warren Todd, head of Rider Levett Bucknall’s Chicago office.
In the overall US office market, property prices have dropped 22% from January 2023 through January 2024, according to Green Street.
A recovery would require lower interest rates, a more certain economic outlook and a return of workers to offices, said Brian Atkinson, managing director for Chicago at real estate developer Hines.
