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San Francisco area and New York City top JLL’s list of Most Expensive Streets
CHICAGO, Sept. 30, 2013 – What city comes top of mind when you think of high rent – for both residential and office space? New York City? You might be surprised to learn the country’s Most Expensive Street for office space is in a San Francisco suburb, according to a research study released by Jones Lang LaSalle. The recent study of 40 office markets across the United States reveals the list of most expensive streets* for office space in 2013, a follow-up to the study’s launch in 2011.
Jones Lang LaSalle’s 2013 Top Ten Most Expensive U.S. Streets for Office Space*
Sand Hill Road in Menlo Park, Calif. (San Francisco Peninsula market), remains number one on the list with average rents reaching almost $111 per square foot (p.s.f.), New York City’s tony Fifth Avenue, once again holding the number two spot, is the most expensive central business district street in the U.S. with average rents of approximately $102 p.s.f. Northern California’s University Avenue in Silicon Valley takes the number three spot with average rents of about $95 p.s.f. Nationally, rental rates on the most expensive streets increased on average 10.9 percent since 2011 as the recovery moves forward, but also due to a lack of new construction leading to supply constraints as well as growth in the tech and energy industries in particular.
Reflecting the tech industry’s growth, the San Francisco Bay area holds three spots in the top-10 rankings – more than any other office market. California Street in the city of San Francisco moves up several notches to number six with a 45.3 percent increase to $62 p.s.f. placing it above Boston’s Boylston Street for the first time, (and in the number one and three spot are Sand Hill Road and University Avenue). For Houston and Dallas, the energy sector is driving up rents on streets Louisiana Street and McKinney Avenue, which have experienced rent growth of 11.8 and 5.4 percent, respectively.
Also notable in this year’s results; vacancy rates are falling fast on streets in many markets hit worst by the recession. These include Brickell Avenue (Miami), Peachtree Street (Atlanta), Fayetteville Street (Raleigh), and Boy Scout Boulevard (Tampa). Also illustrating an improving economy, single-digit vacancies were achieved by 14 streets in the rankings. Midwestern markets remain the most affordable; the most expensive street is Chicago’s Wacker Drive, where a tenant can expect to pay $36 p.s.f.
“This year’s results are particularly interesting because, not only do they demonstrate the standard real estate rule that location is everything, but they also reflect the overall office space demand trend in the U.S.,” said John Sikaitis, Managing Director of Office Research at Jones Lang LaSalle. “We are seeing a slight uptick in occupancy rates as a result of the rate of business growth in the economy combined with a lack of new development.”
The Top 10 Most Expensive U.S. Streets for Office Space:1. Sand Hill Road, Menlo Park, Calif.: $111.00 p.s.f. (-2.5%)Historically the most expensive area in Silicon Valley, Sand Hill Road has deep roots with the venture capital community and houses the top VC firms in the greater Bay Area.
2. Fifth Avenue, Midtown Manhattan, NYC: $102.00 p.s.f. (+5.0)Consistently ranked among the most expensive shopping streets in the world, Fifth Avenue is also home to numerous hedge funds looking for top-quality space in Midtown and willing to pay more for those coveted office locations with their unparalleled amenities.
3. University Avenue, Silicon Valley, Calif.: $95.00 p.s.f. (+14.1%)Located in Downtown Palo Alto, University Avenue is known for its vibrant startup community, as its proximity to Stanford University makes it an ideal location for recruiting top young talent.
4. Greenwich Avenue, Greenwich, Conn.: $93.00 p.s.f. (+3.4%)Greenwich Avenue competes with the best commercial real estate, leveraging its rich history preserved through older buildings. Top-shelf retail establishments dot the historically-rich corridor, from the top of the Avenue down through the transit center. Hedge funds and financial services firms occupy the majority of office space, with many top executives only steps from their homes. Premier office buildings offer close proximity to train, and command rents as high as $100 p.s.f.
5. Pennsylvania Avenue, Washington, DC: $76.00 p.s.f (-5.5%)Despite slower overall market conditions in recent quarters, Pennsylvania Avenue has continued to experience rent premiums to the rest of the market. Known as “America’s Main Street,” Pennsylvania Avenue is home to many firms wanting close proximity to Washington’s two main points of power, the White House to the west and the Capitol to the east. A big growth area in tenant demand in recent years has stemmed from the government affairs sector of corporate America.
6. California Street, San Francisco: $62.10 p.s.f. (+43.9%)The main street of the city’s North Financial District, California Street, is known for its historic cable car route, broadness and high-priced real estate. Growth in tech and associated industries, along with limited new supply, have pushed rents up by almost half over the past two years.
7. Boylston Street, Boston: $60.20 p.s.f. (+14.3%)Boylston Street runs through two of Boston’s most prestigious areas, Back Bay and the Financial District. It is home to numerous landmarks, Trophy office buildings and high-end retail, as well as some of the city’s most distinctive skyscrapers.
8. Avenue of the Stars, Los Angeles: $60.12 p.s.f. (+1.9%)The thoroughfare through the highly desirable Century City market, Avenue of the Stars is home to many prominent legal and financial service firms and talent firms, as well as the largest cluster of Class A Trophy assets on the Westside. 9. Royal Palm Way, West Palm Beach: $58.52 p.s.f. (+0.9%)Royal Palm Way is dubbed “Banker’s Row” due to the concentration of wealth management and financial services firms, catering to the wealthy residents on Palm Beach Island.10. Newport Center Drive, Orange County: $50.06 p.s.f. (+4.3%)Sitting on a bluff overlooking the Pacific Ocean, Newport Center Drive is a 1.3 mile ring that encompasses the Fashion Island retail center. World class dining and retail amenities along with ocean view suites and access to posh residential neighborhoods make Newport Center Drive one of the most premiere places to rent office space in Southern California.2013 U.S. Most Expensive Streets for Office Space*:2011 North America’s Most Expensive Streets for Office Space**:* The rental figures reflect the highest office rents in each individual market.** The rental information is Jones Lang LaSalle's proprietary data and quarterly review of the top 40 office markets across the United States. This data is for Q2 2013.For more news, videos and research resources on Jones Lang LaSalle, pleases visit Jones Lang LaSalle’s U.S. Media Center web page.
About Jones Lang LaSalle Jones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 2.6 billion square feet and completed $63 billion in sales, acquisitions and finance transactions in 2012. Its investment management business, LaSalle Investment Management, has $46.3 billion of real estate assets under management. For further information, visit www.jll.com.
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