Tech Drives Bay Area to Top of ‘America’s Most Expensive Streets’ List
- Nov 19, 2015
Three of the top five “Most Expensive Streets” in the United States are located in the Bay Area, with Sand Hill Road in Menlo Park, Calif., coming in at first place with the most expensive average rent in the country.
For the third time in a row, Sand Hill Road is at the top of JLL’s rankings of “America’s Most Expensive Streets”, with a 2015 average rent of $141.60 per square foot, which is 27 percent more than the last report in 2013. Home to venture capital firms like Blackstone, Greylock and Shasta Ventures, JLL calls it the “VC firm nerve center.”
Hamilton Avenue in Palo Alto, Calif. came in second place. JLL notes that the tech industry played a large role in Hamilton Avenue’s rise to second. Two years ago, it wasn’t even among the top 10 most expensive streets. Now its vacancy rate is 0.8 percent, and its 2015 average rent is $124.44 per square foot, up more than 31 percent since 2013.
“Walk down Hamilton Avenue and you’ll see it’s lined with tech companies and venture capital/private equity firms – it really is the center of the Silicon Valley world,” said Hugh Scott, managing director with JLL’s tenant representation. “The surrounding streets are similar to Hamilton Avenue; home to tech tenants and located near Stanford University. But Hamilton Avenue simply has more office product than many of the other streets in and around Palo Alto and tenants are taking every opportunity to grab whatever space they can.”
Mission Street in San Francisco, another hot tech corridor that didn’t even break the top 10 in 2013, supplanted the city’s previous most expensive street – California Street – and came in fifth this year, just behind Fifth Avenue in Manhattan and Greenwich Avenue in Greenwich, Conn. With an average 2015 rent of $89.58 per square foot, Mission Street made its mark because of the rise of tech developments south of Market Street and its location near the Transbay redevelopment, which includes a new transit terminal and skyscrapers like the 61-story, 1.4 million-square-foot Salesforce Tower under construction at 1st, Mission and Fremont Streets.
The JLL report notes that Mission Street’s first appearance on the Top 10 list is “emblematic of the fundamental shifts in the area, San Francisco’s most expensive street changed in 2015 from California Street to Mission Street.”
Fifth Avenue in Manhattan, which faces competition from creative space in Midtown South that is very attractive to tech and new media companies, as well as rising micro-markets like Bryant Park and Columbus Circle, still reached third, dropping down one spot from two years ago. With its 2015 average rent of $119.27 per square foot, JLL notes that Fifth Avenue is still the “premier address” in New York City, and home to many financial, law and private equity firms.
Right behind, in fourth place, is Greenwich Avenue in Fairfield County, Conn., known as a hub for hedge funds that offers proximity to New York City. With a slowdown in Fairfield’s office market in recent years, Greenwich Avenue’s average rent dropped nearly 3 percent from 2013, but it still commands $90.25 per square foot.
Pennsylvania Avenue in Washington, D.C., is another place where rents have dropped since the last survey, but at $72.65 per square foot, “America’s Main Street” is sixth, and still has international name recognition due to its location near the White House and Capitol. JLL expects rents to rise with increased tenant demand and the redevelopment of marquee buildings.
Boylston Street in Boston’s Back Bay has more retail and restaurants than office buildings, but JLL notes there are high-profile office properties consisting mainly of hedge funds, law and private equity firms. A 17-story, 425,000-square-foot building is under construction at 888 Boylston that will have Natixis Global Asset Management as its main tenant. The street comes in seventh, with a 2015 average rent of $67.44 per square foot. Additional retail and hotel space is also coming to Boylston Street.
“Tenants will pay a little bit more in rent to have restaurants, retail, entertainment and residential right by the office – their employees are demanding this,” said Ben Heller, managing director with JLL’s agency leasing. “The ‘live/work/play’ dynamic is the real deal and it’s being built up in other corridors in Boston such as the Seaport District. Going forward, surrounding amenities will play a huge rule in where a tenant signs their lease.”
Rounding out the Top 10 are:
- #8 – Avenue of the Stars, Los Angeles – a Century City submarket that is still a hub for prominent legal, financial and entertainment tenants, and has an average 2015 rent of $63.12 per square foot.
- # 9 – Royal Palm Way, West Palm Beach, Fla. – Known as “Bankers Row,” the 2015 average rent is $58.07 per square foot, down slightly from $58.52 per square foot two years ago.
- #10 – Newport Center Drive, Newport Beach, Calif. – Located in Orange County, it’s a top retail and office destination with a 2015 average rent of $51.72 per square foot, up 3.3 percent since 2013.