The Most Expensive U.S. Office Space Submarkets In 2019

Key Takeaways

• California home to 36 of 100 most expensive U.S. office submarkets in 2019
• New York’s Plaza District, Gramercy Park and Chelsea all in top 10
• Mountain View’s Shoreline takes most expensive submarket in 2019 with average sale price per square foot of $1,554 compared to $233 national average

The U.S. commercial real estate market saw a total of 2,619 major deals last year, averaging $233 per square foot of office space. The office market is presently driven by Silicon Valley tech giants as well as financial conglomerates in New York.

To determine which areas are most in demand, COMMERCIALCafé conducted a study that ranked the most expensive office submarkets in the U.S. in 2019.

A submarket is defined as a component area of a larger market. For instance, the Plaza District in New York is a submarket of the larger Manhattan office market.

As usual, California and New York City dominated both the full list and the top 10. In particular, California made up half of the top 10, and Mountain View’s Shoreline submarket took the #1 spot as the most expensive office submarket in 2019. The submarket, situated in the Bay Area, averaged $1,554 per square foot of office space.

Mountain View – Shoreline’s first-place finish is due to several major deals that occurred last year. Specifically, Google purchased the properties at 1842 North Shoreline Boulevard, 900 Alta Avenue and 1053 Joaquin Road, totaling more than $300 million.

Besides Mountain View’s Shoreline, 35 other California submarkets also made the top 100. Santa Monica landed at #3, while three submarkets in the San Francisco office market occupied the 6th, 8th and 10th places, respectively.

On the opposite coast, three submarkets from New York state made the top 100 list, all of which are in Manhattan. Notably, they all made the top 10, as well. The most expensive of the three – the Plaza District submarket – averaged $1,260 per square foot of office space to land in the runner-up spot. The largest deal that occurred in the Plaza District last year was Wafra’s sale of the Coca-Cola Building to SHVO for $937 million – just a few weeks after Wafra initially purchased it for $909 million.

The other two New York submarkets were Gramercy Park at #5 and Chelsea at #9. The state of New York also had the highest average sale price among the contiguous United States at $515 per square foot.

Besides the three submarkets in New York State, two other submarkets in New York’s metropolitan area were also featured in the top 100: Bergen County Central in New Jersey at #62 and Stamford, Connecticut, at #75.

As far as the highest number of submarkets in the top 100, North Carolina and Washington state trailed California, with 11 and 10 entries, respectively. The highest-ranked North Carolina submarket was Crownpoint, which finished at #42 with an average price per square foot of $373.

In Washington, Lake Union cracked the top 10, reaching eighth place with an average price of $866 per square foot — higher than Bellevue at #14 and Seattle’s central business district at #23. Washington had a statewide average price per square foot of $414.

Meanwhile, the Sun Belt also added a number of submarkets in the top 100. Specifically, seven submarkets in Texas — including West Houston’s central business district at #47 — made the list. Other Sun Belt states with entries in the top 100 were Florida with seven, Arizona with three and Nevada with one.

Last year, the most active major office market by number of deals was the Washington D.C. – Suburban Maryland market with 155 sales. Eight submarkets part of this office market made the top 100 list — four in Virginia, three in Washington, D.C. and one in Maryland. The largest deal in the market was the purchase of 1701 Rhode Island Avenue by Exan Group for $105 million, which averaged $1,035 per square foot.

Other states also placed submarkets in the top 100, including Oregon and Colorado with two each and Illinois with one submarket – West Loop, a Chicago suburb – in the 20th spot.

Check out a detailed analysis of 2019’s most expensive office submarkets in COMMERCIALCafé’s full report.