Downtown Boston Submarket is the Most Expensive Office Space, With Average Asking Rent at $51 PSF

BOSTON–Downtown Boston submarket is the most expensive office space in Greater Boston, with average asking rents here resting at $51 per square foot, according to a report by CommercialSearch.

Here are the highlights from the report:

• Among the 10 priciest submarkets, asking rent averages started at $66 per square foot.
• Manhattan’s Plaza District (NY), Menlo Park & Palo Alto (Calif.) took the podium
• Western submarkets claimed 31 of the top 50 spots and hailed from California, Washington & Colorado.
• Florida & Texas submarkets dominated Southern region entries.
• Manhattan & Boston were home to the most expensive office submarkets in the Northeast.
• No Midwestern U.S. submarkets made the list of the top 50 priciest.

Although commercial market conditions continue to change globally, there are some silver linings to consider as we move into the new year: As noted in the Global Outlook report recently released by Hines, most global economies and markets opened in 2022, and some progress has been made against the supply chain issues that plagued 2021. As a result, balance sheets have improved for many U.S. businesses during the past year, as have employment figures and other key economic indicators.

Manhattan’s Plaza District & San Francisco’s Menlo Park Lead Top 10 Priciest US Submarkets

The 10 most expensive office submarkets in the U.S. were a mix of California and New York locations. Among them, full-service equivalent asking rents averaged between $66 and $117 per square foot in Q4 2022. In particular, office space in Manhattan’s Plaza District ranked first, with average asking rents here resting at $117 per square foot. Then, the Menlo Park submarket landed in second place, with an average asking rent of $114 per square foot — the only other top 50 entry to see an average of more than $100 per square foot.

Likewise, four California submarkets took the third through sixth spots in our ranking: Office space in Palo Alto landed in third with asking rents of $97 per square foot, on average. And, in fourth place, Redwood City averaged full-service equivalent asking rents of roughly $86 per square foot. Next, Century City office space ranked fifth at the close of last year, with figures here averaging $74.30 per square foot in asking rents. Office space in the San Francisco South Financial District ranked a very close sixth with asking rents of $74.10 per square foot, on average.

Meanwhile, the one other New York entry in the top 10 took the seventh spot: Asking rents for Gramercy Park office space in Manhattan averaged $69.60 per square foot in the final quarter of last year. Then, following very close behind in eighth place was the Los Angeles submarket of Beverly Hills, where asking rents averaged $69.30 per square foot.

Next, two more San Francisco submarkets rounded out the top 10: Asking rents for Redwood Shores office space averaged $68 per square foot and took ninth place. Finally, office space in San Mateo commanded an average of $66 per square foot in full-service equivalent asking rents and closed the year in 10th place.

See the full list of the 50 priciest office submarkets in the U.S. in Q4 2022 in the table below and read on for regional highlights.

Interestingly, an overview by region of the entire ranking showed that more than half of the country’s 50 most expensive office submarkets hailed from the Western U.S. — 26 locations across California markets, four locations in Seattle and one highly desirable submarket in Denver.

The second-most dominant regional representation in the top 50 included 12 Southern U.S. submarkets, nearly half of which are in Florida. And, representing Northeastern U.S. locations, the remaining seven entries included submarkets in New York and in the Boston office market.

Western US Office Submarkets Claim 31 of Top 50 Spots

The 26 California locations that made the cut included 10 Los Angeles office submarkets, as well as seven in San Francisco, five in San Diego, and four in the Bay Area. Asking office rent averages among these Golden State submarkets ranged from nearly $44 per square foot for office space in downtown San Diego to just more than $114 per square foot for Menlo Park office space.

Outside of California, five other western submarkets also made the top 50 ranking — four in Seattle and one hailing from Denver. Notably, Bellevue office space was the priciest in Seattle at the close of last year, averaging $50 per square foot and landing in 30th place among the top 50. Otherwise, asking rents for north Seattle office space averaged nearly $45 per square foot for 41^st place; office space in Renton asked $43 per square foot, on average, ranking 48^th; and office space in the Seattle central business district averaged $41 per square foot to rank 49^th.

Further inland, office space in the Central Denver submarket of LoDo asked for an average of roughly $46 per square foot in full-service equivalent rents. In doing so, LoDo office space claimed 38^th place among the 50 most expensive submarkets in the U.S.

Florida Submarkets Claim 5 of 12 Southern US Submarkets in Top 50

The second-largest regional group in the ranking was claimed by 12 Southern U.S. submarkets, five of which are in Florida. More precisely, the priciest office space in the Sunshine State in Q4 2022 was in downtown West Palm Beach, where asking rents averaged $57.60 per square foot.

The remaining seven Southern U.S. entries included submarkets from markets in Texas; Georgia; and Washington, D.C.-suburban Maryland. Among them, office space in downtown Austin ranked best: Asking rents here averaged $58 per square foot. Next, south Austin office space was the second-most expensive in Texas with a $48.30 per square foot average.

Meanwhile, two Washington, D.C. submarkets accounted for the third- and fourth-most expensive office space in the Southern U.S.: East End Washington, D.C. asked $55.30 per square foot in rents, on average, while office space in the Washington, D.C. central business district followed close behind with an average asking rate of $52.60 per square foot.

Further south in Georgia, west Atlanta was the best submarket in terms of the average asking rate at the close of last year. Office space in west Atlanta asked for $41 per square foot in full-service equivalent rents, which landed 50^th in our national ranking and was the 12^th-most expensive among Southern U.S. submarkets.

Manhattan Submarkets Dominate Northeastern Region Entries

Northeastern U.S. submarkets accounted for the remaining seven entries in the top 50: Six positions were claimed by office submarkets in Manhattan, while one was in Boston.

The priciest office space in New York City in Q4 2022 was in the Plaza District, where asking rents averaged $117 per square foot. Additionally, Gramercy Park (with average asking rents of $69 per square foot) and Murray Hill ($60 per square foot) were New York’s second- and third-priciest submarkets, respectively.

Finally, the priciest office space in Boston was in the downtown submarket. Asking rents here averaged nearly $51 per square foot, ranking sixth in the region and 29^th among the 50 most expensive in the country. Lastly, office space in Chelsea (Manhattan, NY) rounded out the Northeastern entries in seventh place with an average asking rent of nearly $44 per square foot.