As the effects of the pandemic continue to be felt in the commercial real estate (CRE) world, some companies are switching up their future policies regarding work from home and reevaluating their office footprint.
So, CommercialSearch conducted a study to find which were the 50 most expensive office space submarkets in Q4 2020. Overall, 42 of the 50 entries were in California or New York state, with the Golden State raking in more than half of all entries. Meanwhile, Washington, D.C.; Florida; Massachusetts; and Texas were home to the remaining eight areas where office space is the priciest. Keep reading for more details.
10 Most Expensive Office Submarkets Are in Silicon Valley Tech Centers & Manhattan’s Priciest Areas
Taking the title of the most expensive submarket in Q4 2020 was Menlo Park, Calif., with an average asking rent of $109.57 per square foot per year. Home to Facebook’s headquarters, Menlo Park was the priciest of the 14 entries from Northern California on the list, surpassing prime locations for San Francisco office space like Redwood City, SOMA and the South Financial District.
The other two spots on the podium were taken by two of the most prestigious submarkets for office space in Manhattan — the Plaza District and SoHo — with asking prices of $104.29 and $94.86 yearly per square foot, respectively. One other Manhattan submarket — Times Square/Hell’s Kitchen — also made the top 10.
42 of 50 Most Expensive Submarkets Are in California or New York
Similarly, the top 50 was also mostly a showdown between Silicon Valley and Manhattan. Specifically, 13 New York state submarkets were among the top 50 most expensive. Notably, all of them are in Manhattan, with the exception of Brooklyn’s Navy Yard/Fort Greene/Clinton Hill submarket at #39 and Brooklyn Heights at #47.
Meanwhile, of California’s 29 entries, 14 are in the San Francisco office market, nine are in the Bay Area and six are in Los Angeles. The Bay Area’s most expensive submarket was Palo Alto at #4 with an average of $92.90 per square foot, while Beverly Hills was the most expensive LA submarket with an average asking rent of $70.57 — landing it in the 19th spot.
Boston Home to Most Expensive Submarket Outside California & NYC
California and New York were also home to almost all of the 30 most expensive submarkets. The only exception was the Cambridge submarket — the most expensive location for Boston office space —where rents averaged $73.73 per square foot, bringing it into the #15 spot. One other Massachusetts submarket also made the ranking: Downtown Boston finished in 31st place with an average asking rent of $64.66 per square foot.
Submarkets in the Washington, D.C. metro that made the top 50 included NoMa at #35, East End at #43 and Seventh Street Corridor at #49. Average rent costs for D.C. office space in NoMa were $62.47 yearly per square foot in Q4 2020, while average rents in East End and Seventh Street Corridor were $59.30 and $58.42, respectively.
Two Texas submarkets — both in Austin — also made the list: East Austin claimed the 40th spot, while downtown Austin came in 46th, with average asking rents of $60.60 and $58.81, respectively. The city’s status as an increasingly popular tech hub benefiting from population influx from other metros helped drive demand for offices in Austin.
The top 50 was rounded out by Florida’s Brickell submarket, a rapidly growing Miami neighborhood with an average rent price of $58 per square foot.
For more details and the complete methodology, read CommercialSearch’s most expensive submarkets study.