Highest Priced Commercial Real Estate Markets

New York City Reclaims Title as Highest Priced Commercial Real Estate Market Worldwide
New York City Peak Rents Top $225 per SF

San Francisco, Boston and Washington, DC Top List of Highest-Priced U.S. Office Markets

New York City’s Midtown Manhattan market reclaimed its title as the highest priced office market in the world in 2008, according to NAI Global’s 2009 Global Market Report. Premium space in Midtown Manhattan peaked at $225 per square foot in 2008, before the sinking economy could take its toll.

London’s Mayfair region held the “highest priced office market” title in 2008 with a peak rent of $265 per square foot per year. In 2009 the market took second place as peak rents fell $56 per square foot to $209 per square foot per year. Hong Kong, the third highest-priced office market in the world, reported peak rents of $186 per square foot per year for 2008, a drop of $77 per square foot from the 2007 high of $263 per square foot per year.

“The global economic crisis is impacting property markets big and small,” said Jeffrey M. Finn, NAI Global President & CEO. “Once strong markets are suddenly facing high vacancy rates and tenants that are taking their time making new space decisions. New York City, in many ways the capital of commerce for the world, saw enough demand to keep prices stable through much of 2008 before the wheels fell off late in the year. Rents are expected to drop significantly in most major world markets in 2009.”
The most expensive space in New York was for premium space at 9 West 57th Street, according to Henry Goodfriend, Executive Managing Director in NAI Global’s New York City office. “At one point we had several buildings with asking rents approaching $250 per square foot, but the market has changed dramatically and those landlords aren’t quoting rates anymore,” he stated.

New York’s peak rents are more than double the highest rents reported in any other U.S. Market. Midtown was followed by San Francisco with peak rents of $110 per square foot downtown, New York City Downtown Manhattan with peak rents of $65 per square foot, and Boston with top rents of $65 per square foot in the Financial District.
San Mateo, California, topped the list of highest-priced suburban office markets in the U.S. with peak rents of $228 per square foot per year, nearly three times the peak rent for Class A space in the second highest priced market. San Mateo is home to Sand Hill Road, a prestigious address for top venture capital firms. Santa Clara County, aka Silicon Valley, was second with top-end rents of $81 per square foot, follow by Los Angeles at $62 per square foot.

Overall, California markets claimed four of the 10 priciest suburban markets in the U.S. Northern New Jersey, at $53, Northern Virginia, at $45, and Miami, at $47.50, also made the list. NAI Global is one of the world’s largest commercial real estate services providers. Headquartered in Princeton, New Jersey, NAI Global manages a network of 5,000 professionals and 325 offices in 55 countries. Now in its 23rd year, NAI’s Global Market Report offers insider insight and perspective on market conditions reported by NAI experts on the ground in more than 200 property markets worldwide.