U.S. Office Space Still a Bargain

Four U.S. cities cracked a list of the world’s top 50 priciest office markets, according to a new study by CB Richard Ellis. Topping the all-eastern seaboard lineup was Midtown Manhattan, which ranked 27th with average midyear office rents of $53.69 per sq. ft. followed by Washington, D.C. at 37th, Boston at 45th and Stamford, which squeaked by at 49th.

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“From an occupancy cost perspective, the U.S. remains a great place to do business,” says Ward S. Caswell, CB Richard Ellis’ director of information management. “While U.S. rents are rising, they aren’t rising at the same rate as they are internationally, even when accounting for the recent appreciation of the dollar against foreign currencies.”

As Caswell notes, the national office market is rebounding even if rental rates are following at a distance. Data from CB Richard Ellis shows that national vacancy fell from 14.5% at midyear 2004 to 13.4% at the end of June.

With the U.S. economy outpacing most of Europe and Asia, Caswell expects more U.S. cities to break into the top 50 list by the end of this year. One factor that influences the rankings is the relative strength of each nation’s currency, so a strengthening dollar should push U.S. rents up relative to rates in foreign cities.

The most expensive office market in the world is London’s West End district, where an average sq. ft. cost $178.67 at midyear. The second steepest rents were found in Tokyo’s Inner Central office district where an average sq. ft. fetched $131.10.

London held onto its number one ranking from 2004. Meanwhile across the English Channel, Paris defended its position as the world’s fifth most expensive office market for 2004 and 2005. The average cost to rent one sq. ft. of Parisian office space was $89.58 at midyear.

And what about the cheapest of all top 50 world markets? That dubious honor goes to Ottawa, Canada where the average per sq. ft. cost was $37.62 at midyear. That’s some value when you consider that the same space is roughly four times less expensive than London’s West End.


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