Why Corporations Are Building "Trophy Buildings" Amid the Office Apocalypse

Older, less-desirable office buildings across the nation and world are struggling to fill vacant leases - so much so that a $1.5 trillion “wall of debt” threatens to decimate city and state budgets in an “office real estate apocalypse.” Yet even with that looming, many developers in major cities are going full steam ahead to build huge, state-of-the-art, glittering new buildings that are set to add millions more square feet of office space to, for example, New York City alone in the coming years. That might seem illogical - unless you’re a real estate developer. In that case, it makes perfect sense. Get the 5-minute newsletter keeping 2M+ innovators in the loop: https://clickhubspot.com/lgm Sources: CBRE https://www.cbre.com/properties/properties-for-lease/office/details/US-SMPL-97514/one-vanderbilt-1-vanderbilt-avenue-new-york-ny-10017 https://www.cbre.com/insights/viewpoints/a-unique-opportunity-for-trophy-office-development Bloomberg https://www.bloomberg.com/news/articles/2023-06-23/commercial-real-estate-s-extend-and-pretend-is-on-shaky-ground https://www.bloomberg.com/news/articles/2024-02-07/us-commercial-real-estate-contagion-is-spreading-to-europe The Atlantic https://www.theatlantic.com/ideas/archive/2023/06/commercial-real-estate-crisis-empty-offices/674310/ Nat’l Bureau of Econ. Research https://www.nber.org/papers/w30526 Business Insider https://www.businessinsider.com/office-apocalypse-commerical-real-estate-price-drop-outlook-housing-supply-2024-1 https://www.businessinsider.com/real-estate-outlook-offices-commercial-debt-downturn-recession-wall-street-2024-3 Wall Street Journal https://www.wsj.com/real-estate/commercial/the-bill-is-coming-due-on-a-record-amount-of-commercial-real-estate-debt-451ec8cb https://www.wsj.com/real-estate/commercial/offices-around-america-hit-a-new-vacancy-record-166d98a5 https://www.wsj.com/articles/rebuilt-after-9-11-one-world-trade-center-is-90-filled-after-cost-overruns-and-delays-11631439002 Fortune https://fortune.com/2024/02/23/regional-banks-commercial-real-estate-loan-program-expiring/ Jones Lang LaSalle https://www.us.jll.com/content/dam/jll-com/documents/pdf/research/americas/us/jll-us-office-outlook-q1-2023.pdf Crain’s https://www.chicagobusiness.com/commercial-real-estate/big-move-outs-push-suburban-office-vacancy-another-record-high https://www.crainsnewyork.com/commercial-real-estate/sl-green-beats-leasing-expectations-occupancy-slides NYC Comptroller https://comptroller.nyc.gov/reports/spotlight-new-york-citys-office-market/ New York Times https://www.nytimes.com/2019/03/09/nyregion/hudson-yards-new-york-tax-breaks.html https://www.nytimes.com/2022/12/27/business/what-would-it-take-to-turn-more-offices-into-housing.html Avison Young https://www.avisonyoung.us/documents/92404/1115504/Manhattan+Office+Market+Report+-+Q2+2023.pdf/8fb0816a-60ce-58e8-8b27-b2564919968b?t=1688669629209 CoStar https://www.costar.com/article/1366521803/co-owner-of-new-yorks-chrysler-building-reportedly-told-to-sell-stake Brookfield https://www.brookfield.com/news-insights/insights/misunderstood-us-office-market SL Green https://slgreen.gcs-web.com/static-files/6b6c9783-99d0-4c3f-86dd-c77210c25c36 KPF https://www.kpf.com/news/one-vanderbilt-commands-top-office-rent-says-the-real-deal