In Insights

By Nadja Brandt

(Bloomberg) — Portman Holdings LLC, which has built high-profile properties such as San Francisco’s One Embarcadero Center, plans to break ground in June on its first U.S. 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 U.S. cities and starting projects in smaller markets, even without tenants lined up. Such speculative ventures were shunned by developers after the 2008 property crash.

“Everything in major markets like San Francisco, New York and D.C. is fully priced with low returns, high land costs and peak sales prices,” said John Portman IV, chief operating officer at the Atlanta-based firm. “It’s almost too late for any investors and developers to participate.”

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