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The return of the speculative office development

US developers are completing projects in smaller markets without tenant commitments, as demand for lower-cost office space picks up

Published Wed, Feb 4, 2015 · 09:50 PM
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PORTMAN Holdings LLC, which has built high-profile properties such as San Francisco's One Embarcadero Centre, plans to break ground in June on its first US office development without tenant commitments in more than 25 years.

Portman's project is in Charlotte, North Carolina, while builders such as Houston-based Hines and San Antonio, Texas-based USAA Real Estate Co are also looking beyond the biggest US cities and starting projects in smaller markets, even without tenants lined up.

Such speculative (spec) ventures were shunned by developers after the 2008 property crash.

"Everything in major markets like San Francisco, New York and DC is fully priced with low returns, high land costs and peak sales prices," said John Portman, found…

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