While rents have increased by an average of 13 percent for prime offices globally since 2020, the office delivery pipeline to the end of 2027 is now compressed, especially in the United States and Europe, where it is now barely 8.9 million square foot in the former and 24.2 million square feet in the latter, according to Savills. In its Impacts thought leadership program, Savills says cost inflation, labor shortages, elevated borrowing costs and increased regulation are undermining the viability of new projects, alongside economic and geopolitical uncertainty weighing on consumer and investor confidence.
Although every office development is different, Savills has taken three global cities as a proxy and calculated that, in the current climate, the gross development value (GDV) of an average office development will need to be approximately $3,100 per square foot in New York City,
