North America’s Most Expensive Office Market is in Manhattan

Office tenants looking for a bargain should stay clear of Midtown Manhattan for the foreseeable future.

For tenants, the New York City district is the most expensive in both the country and the continent, the Commercial Observer reported.

It’s the third-most expensive in the world, trailing only London’s West End and Hong Kong; the top three were the same in the previous quarter, according to the Savills report.

Among the 35 markets Savills tracked for the report, Midtown Manhattan placed third with an average net effective cost to tenants of $206.67 per square foot. That represented a 9 percent increase from the previous quarter in occupier costs, which considers rent incentives and fit-out costs, in addition to rent itself.

The report was not clear on how Savills defines the district.

There’s still a long way to go before Midtown Manhattan approaches the exorbitant costs of London’s West End, which recorded an average occupier cost of $277.55 per square foot. But Hong Kong is fading a bit: its average occupier cost of $230.39 was a significant drop from the previous quarter.

Downtown Manhattan ranked fourth among the United States’ priciest office markets, with an average occupier cost of $91.88 per square foot. Sandwiched between the two Manhattan districts were San Francisco and Los Angeles’ Century City neighborhood.

Among the 35 markets tracked by Savills, nearly half saw net effective costs rise for occupiers, due to gross rental growth and rising costs associated with fit-outs. Some markets, however, saw declines in costs and increases in concessions.

“In 2025, we expect continued rent and leasing volume growth as the net effect cost growth we have seen across the world over the past year is set to continue for the foreseeable future,” Savills global occupier services CEO Rick Schuham said in a statement.

— Holden Walter-Warner