U.S. cities such as New York and San Francisco are known for commanding some of the steepest asking rents for quality office spaces. With strong demand and limited supply, it’s no wonder that star cities in the Northeast and on the West Coast are the first to spring to mind when discussing the high costs that businesses face when looking to set up shop in vibrant urban centers. And yet, when the highest-ranking cities from the U.S. in terms of office rents are compared with some of the most sought-after locations around the globe, we get a much more nuanced picture.
In a recent study, commercial space listing platform COMMERCIALCafé combined data collected by CBRE and Cushman & Wakefield to gauge the differences between the most expensive office rates from the U.S. and those seen in the world’s other top office markets.
Manhattan Isn’t Always #1
A list of the world’s top 10 priciest office destinations reveals the first surprise: only three out of 10 cities are on U.S. soil. Manhattan, by far the most expensive location in the U.S., ranks third on this list, behind Asian powerhouses Hong Kong and Beijing–and by no small margin. The $154 annual rent per square-foot in Midtown Manhattan is 43 percent less than the $269 rate paid in Hong Kong. The gap is less pronounced–a mere 12 percent– when comparing Midtown Manhattan to Beijing’s Finance Street with its $174.07 per square-foot annual rent.
The next U.S. entry in this list lands in seventh place. The Bay Area comes in as the priciest office market outside of Manhattan, with per square-foot annual rents in San Jose reaching as high as $111. However, this second American location is outranked by several Asian hubs (Shanghai’s Pudong district, and Tokyo’s Marunouchi and Otemachi districts), as well as London’s West End, which commands $136 annual rent per square foot, and takes the crown as the most expensive office destination in Europe. Greenwich, Connecticut rounds out the top 10 below the $100 mark, with a $92 annual per-square-foot rent. Check out this side-by-side comparison of the highest 30 U.S. office rates compared to the priciest office rents elsewhere in the world:
San Francisco Office Rent is 20 Percent More Affordable Than in New Delhi
To further highlight the differing costs of renting an office in various locations across the world, COMMERCIALCafé set out to determine how much space companies could get for $10,000 per month. In the U.S. $10,000 per month procures 782 square feet of office space in Midtown Manhattan, which is enough to accommodate roughly five employees. Alternatively, the same amount could secure 1,081 square feet of office space for seven employees in San Jose, California. Rates become increasingly attractive as we move further south in California, to Los Angeles (2,165 square feet for 14 employees), and San Diego (2,222 square feet for 15 employees).
As we compare pricy U.S. and non-U.S. office hubs, we find that, despite the hefty office rents in San Francisco, companies can still get more bang for their buck in The City by the Bay (1,354 square feet for nine employees) than they could get in New Delhi’s Connaught Place, where a $10,000 budget is enough for 1,083 square feet and seven employees. Other interesting insights from the rankings: office space in Paris is 40 percent more expensive than in Los Angeles; in Miami, a $10,000 budget per month will get you 41 percent more space than in Dubai.
To see the complete list and learn more about how each city fares, read more here.
With years of experience writing about real estate and a fondness for soaring skyscrapers and all things Chicago, Ioana Neamt now covers the latest CRE news and trends for COMMERCIALCafé. When she’s not catching up on the latest real estate deals and developments, she’s usually busy reading, writing or watching Netflix.