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JLL’s Most Expensive Streets report reveals where office tenants pay top dollar
Dallas, December 7, 2017 –Just how much will companies pay to occupy one of America's most desired office addresses? According to JLL's
2017 Most Expensive Streets study, which looks at priciest U.S. office space, those high-profile strips command an average asking rent of $48.65 per square foot, a 46.9-percent premium compared to the rest of the country. In Dallas, McKinney Avenue in Uptown is demanding upwards of $62 per square foot.
And the country's most expensive streets remain as popular as ever. Just 8.7 percent Dallas' most expensive real estate is vacant – a full 10.5 percentage points higher than the average.
Location, access, visibility
Traditional drivers like the financial, law and consulting industries continue to make their presence felt on these streets. In Dallas, professional services companies, including several notable consulting and law firms, are relocating from the CBD to McKinney Avenue to be closer to Uptown's desirable business environment which includes hip restaurants and nightlife.
"Dallas' Uptown is a desirable location for employment and living," said Walter Bialas, JLL Research. "As one of the original 'live, work, shop, play' environments in DFW, these companies are positioning themselves to attract top talent and retain employees. It's certainly not unique in the grand view of what's happening in commercial real estate, but it's an excellent example of thoughtful urban planning, which has made this area what it is, and something that's being implemented in other areas. It's become a model for good planning both locally and nationally."
Added JLL Capital Markets Managing Director Jack Crews, "Dallas real estate continues to see an increase in value as the demand pushes occupancy and rents in all areas of Uptown. With a limited supply of land for new development and well capitalized ownership investing annually into their buildings the yields investors can now generate from these core buildings are not only strong but sound long term cash flows. Uptown Dallas has established itself as a good diversified 'live, work and play' area with a bright future for growth."
Developing an expensive taste
Adding to the surge in demand for these addresses is exceptional pre-leasing on new developments. For instance, the delivery of FMC Tower on 30th Street in Philadelphia has cemented University City as one of the most desirable office locations in the region's core. That street is now the most expensive in Philadelphia, a city in the midst of a tech, media, education and health expansion. Vacancy on 30th Street is just 7.1 percent and rents carry an 83.9 percent premium, a number that is sure to increase as the Schuykill Yards development matures.
Comparatively, over the past two years, the majority net absorption in Dallas' Uptown has been driven by new construction. According to JLL Research, over one million square feet of new office properties were completed between 2015 and 2017. And while vacancy drifted up slightly over this period, the most recent quarter saw active lease-up that brought vacancy back down to extremely tight levels for the Dallas market, driving rents on McKinney Avenue to an 88.1 percent premium compared to the rest of the metro area.
However, Dallas' Uptown provides relatively more competitive rates for premium Trophy office space compared to the Tier 1 markets and streets across the US according to this study. Where San Francisco and New York are averaging full service office rents of $119.38 and $116.04 per square foot, McKinney Avenue is $51.17 per square foot through Q3 2017.
"Things that were part of the beginning of a trend two years ago, are now becoming real - high rents and increased demand for high-end office product," said Jeff Eckert, JLL Agency Managing Director. "New assets coming online are providing cutting-edge amenities, but what sets Dallas apart are the competitive business costs, affordable cost of living and deep labor pool that continue to make it attractive for companies."
Most Expensive Streets in the U.S.
Sand Hill Road, San Francisco: Home to some of the most prominent venture capital firms, Sand Hill Road is one of the Bay Area's most high-profile business addresses. Rents here average $119.38 per square foot, and have hit as high as $185.
Fifth Avenue, New York: Popular among hedge funds, investment banks and law firms, Fifth Avenue remains a New York landmark and one of the country's most glamorous addresses. Average rents achieved $116.04 per square foot, with top rents of $185 coming at a 157.9 percent premium compared to the rest of the market, helping propel Fifth Avenue up one place from the previous report.
Mission Street, San Francisco: Mission Street is home to a unique blend of prominent tech and financial services tenants, making it one of the best-recognized addresses in San Francisco. With an average asking rent of $93.68 per square foot, Mission Street boosted its ranking by two spots since 2015.
Main Street, Boston: Main Street is at the heart of Kendall Square in Cambridge and a hub for the top life sciences and tech companies globally. An address here comes with average rents of $90 per square foot, a list-topping 143.6 percent premium compared to Boston at large. Vacancy is also in the mid-single digits at a miniscule 5.3 percent.
Greenwich Avenue, Fairfield County: Housing a variety of hedge funds and financial services companies, Greenwich Avenue is also lined with upscale retailers and restaurants. Rents average $86.53 per square foot, with top rents coming in at $101, a whopping 177.4 percent premium compared to the rest of Fairfield County.
Pennsylvania Avenue, Washington, DC: Pennsylvania Avenue not only serves as the address of the White House, it's also home to a variety of prestigious law firms and lobbying organizations and offers some of the best views in Washington, DC. At $80 per square foot, sharing a street with the White House and the Capitol means paying a 95.1 percent premium compared to the rest of the market. The street maintained its ranking from 2015.
Ocean Avenue, Los Angeles: Ocean Avenue runs north to south along the Pacific Coast, offering stunning ocean views and easy access to the beach. But gaining access to the famed strip, where rents average $78.20 per square foot, is anything but easy: vacancy is just 7.1 percent.
Boylston Street, Boston: Boylston Street is the premier office market in Boston's CBD. The area attracts primarily financial and legal services firms. At $68.87 per square foot, Boylston Street was supplanted from its previous ranking at No. 7.
Royal Palm Way, West Palm Beach: With a concentration of high-net worth individuals living in the surrounding areas, Royal Palm Way is home to many financial institutions and wealth management companies. Staying put in the ninth spot on the list, Royal Palm Way averages $61.80 per square foot, a 96.1 percent premium compared to the rest of West Palm Beach.
Congress Avenue, Austin: Traditionally home to financial and state-government users, a wave of new office, multifamily and retail developments has transformed Congress Avenue into one of the market's most dynamic corridors. A newcomer to the list's top 10, Congress Avenue averages $55.20 per square foot and boasts a tiny 9.5 percent vacancy.
JLL Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. The firm's in-depth local market and global investor knowledge delivers the best-in-class solutions for clients — whether a sale, financing, repositioning, advisory or recapitalization execution. In 2016 alone, JLL Capital Markets completed $145 billion in investment sale and debt and equity transactions globally. The firm's Capital Markets team comprises more than 2,000 specialists, operating all over the globe.
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JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $145 billion. At the end of the third quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of over 80,000. As of September 30, 2017, LaSalle Investment Management had $59.0 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit
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