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News release

Chicago

Tech companies are snapping up the world’s most expensive offices

JLL report reveals cost of leasing premium offices is up, particularly in technology-rich cities


CHICAGO, Dec. 11, 2017 – Cities with a growing technology sector are driving premium office rents up worldwide, with New York, Silicon Valley and London among the top 10 premium office markets globally.

JLL's latest Premium Office Rent Tracker (PORT), which looks at the "top achievable" rents in spaces over 10,000 square feet in the highest quality building in the premier office district of each city, reveals the market with the most expensive premium office rent in the world is Central in Hong Kong. New York's Midtown takes the second spot, followed by London's West End, Beijing's Finance Street and Silicon Valley in California. New York was previously ranked behind London.

"Technology-rich cities are leading the most expensive office markets globally, including the U.S. tech hubs of New York Midtown, Silicon Valley, San Francisco and Boston; London and Stockholm in Europe; and Beijing, Shenzhen and Tokyo in Asia," says Jeff Eckert, JLL Managing Director of Agency Leasing. "The question now becomes how can they remain the top destinations for the next wave of technology firms and start-ups in the face of strong competition from more affordable tech hubs like Amsterdam, Berlin and Seattle?"

While cost is a key factor, companies selecting their next office location are prioritizing access to talent, explains JLL International Director Chris Roeder.

"We continue to see a greater number of companies from the technology sector targeting premium buildings to attract top talent and enhance their brand image. Firms are likely to continue focusing on amenity rich buildings, in high growth residential areas, with office layouts that have innovative space offerings to make sure they meet employee needs, while driving effectiveness and engagement levels," says Roeder.

Affordable options

While seven out of 10 of the most expensive premium office markets are in Asia, the region's economic diversity also means that it offers some of the world's most competitively priced premium space, with Kuala Lumpur, Manila and Bangkok comprising the top three most affordable premium office locations globally.

In the U.S., the most affordable major office markets are traditionally found in Sun Belt cities such as Houston, Atlanta and Dallas, where an ample supply pipeline has kept occupancy costs down.

In Europe, Warsaw, Brussels, Amsterdam and Berlin offer some of the world's most affordable office space. These lower cost markets have attracted substantial corporate interest – leasing volumes in Warsaw and Berlin have risen significantly since 2014, while volume in Amsterdam is at its highest since the Global Financial Crisis in 2008.

About JLL's Premium Office Rent Tracker

In this third edition of PORT, we compare like-for-like occupation costs across 54 major office markets in 46 cities. The 2017 edition includes a further 19 markets from 2016, where we included 35 major markets in 31 cities of differing function and evolution.

Premium office rents refer to the "top achievable" in units over 10,000 square feet in the premium building in the premier office district of each city. In tall buildings, the middle zone is used as the benchmark. The report excludes rents that represent a premium level paid for a small quantity of space or highly prestigious units where a significant premium applies.

Total occupancy costs are calculated by combining the net effective rent (for a mid-zone floor of around 10,000 square feet) with additional costs (e.g. service charges, taxes) in the market's best-performing building.

Top 10 most expensive premium office rental locations in the world:

 2017Cost per square foot (USD)
1Hong Kong, Central$323
2New York, Midtown$194
3London, West End$193
4Beijing, Finance Street$190
5Silicon Valley$158
6Delhi$147
7Beijing, CBD$143
8Shenzhen$140
9Tokyo, Marunouchi$138
10Shanghai, Pudong$134

 

Top 10 most affordable premium office rental locations in the world:

 

 2017Cost per square foot (USD)
1Kuala Lumpur$30
2Manila$35
3Bangkok$35
4Warsaw$40
5Brussels$48
6Amsterdam$49
7Atlanta$51
8Seattle$52
9La Defense, Paris$52
10Houston$52

 -​ends -​

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About JLL

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 second 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 www.jll.com.