Economy Watch: Office Occupancy Rising Fast in Some U.S. Markets

Several major U.S. cities made CBRE's top 20 list of the markets with the fastest-increasing office occupancy costs worldwide, including Houston, Midtown-South Manhattan, Denver, Chicago, among others.

office buildingsCompared with most of the developed world, only a handful of U.S. office markets are among the most expensive in terms of occupancy costs, according to new data from CBRE. Among the 10 most expensive office markets in the world, for example, only two are in the U.S.—and they’re both New York: Midtown Manhattan and Midtown-South Manhattan, at No. 3 and No. 8, respectively, with occupancy costs (rent, service charges and taxes) per square foot per year of $202.79 and $156.19.

Hong Kong and the West End of London remain at No. 1 and No. 2 most expensive in terms of occupancy costs. Even in the top 20 most expensive global office markets, U.S. markets aren’t especially numerous. Downtown San Francisco is 14th and downtown Boston is 16th, though San Francisco (Peninsula) is 21st, downtown Manhattan is 22nd, downtown Washington D.C. is 23rd, and suburban L.A. is 24th.

U.S. office markets are better represented on CBRE’s list of office markets in which occupancy costs grew the most between the first quarter of 2016 and the first quarter of 2017. Denver, for one, is seeing steep cost increases. In the Denver suburbs, costs are up 17.2 percent year-over-year, the fourth highest rate of increase in the world, while downtown Denver saw an increase of 8.1 percent, tying with Bangalore for No. 16.

Also on top 20 the list of fast-increasing office occupancy costs worldwide are Houston (up 15.3 percent, despite the oil slump), Midtown-South Manhattan (up 14.7 percent), downtown Chicago (up 10.2 percent), Seattle (up 7.9 percent) and Atlanta Buckhead & Midtown (up. 7.9 percent).