Despite high office vacancy rates across the U.S., there is a shortage of top-tier office spaces in prime locations such as Miami's Brickell district, New York City’s Park Avenue, and Century City in Los Angeles. These areas are in high demand by firms in technology, finance, and other sectors looking for high-quality workspaces with outdoor areas, fitness centers, and proximity to transport hubs.

Major developers like Hines and BXP are planning new projects to meet this demand, while SL Green Realty, New York’s largest office landlord, is looking to acquire a significant development site by the end of the year.

The divide between top-tier office spaces and other buildings is growing, with many older spaces left unused or candidates for conversion into residential properties. Upgrading existing spaces is costly, and not all landlords have the resources or are willing to take the risk.

The financial outlook for the office sector is grim, with national office vacancy rates at a record 20.4% and the delinquency rate of office-backed debt at an all-time high. Despite this, top-tier office spaces are seeing increased occupancy and rents, with landlords reducing tenant concessions.

Developers broke ground on only 14 million square feet of new office space in 2024, a significant decrease from the pre-pandemic average. This scarcity of new construction is driving up rents and competition for quality space.

BXP is planning new developments in New York and Washington, D.C., including a new tower near Grand Central Terminal and a redevelopment near the White House. McDermott Will & Emery has already secured space in the upcoming D.C. tower, prioritizing quality over cost to maintain employee satisfaction.