Feb 10, 2021 - Economy

Bay Area, NYC still command priciest office space

Data: CommercialSearch; Chart: Axios Visuals
Data: CommercialSearch; Chart: Axios Visuals

Of the 50 most expensive places to rent office space, 29 are in California and 13 are in New York — with the Bay Area, Manhattan and Brooklyn dominating the list.

Why it matters: Despite predictions of pandemic-related shakeups in commercial real estate — and the fact that so many cubicle dwellers are working at home — desirable urban office space remains at a premium.

Driving the news: A ranking based on 4Q 2020 numbers from CommercialEdge, a property data and listings service, was topped by Menlo Park, California (home to Facebook's headquarters) and the so-called "Plaza District" of midtown Manhattan.

  • Only five states — California, New York, Massachusetts, Texas and Florida — plus the District of Columbia were represented on the list.

The details: The most expensive place that was not in New York or California — at #15 — was Cambridge, Mass.

  • Downtown Boston came in at #31.
  • The "NoMa" area of Washington, D.C. (north of Massachusetts Avenue) was #35.
  • East Austin was #40, while downtown Austin was #46.
  • #50 was Miami's Brickell district.

The data — which includes only spaces of 25,000 square feet or more — represents the "asking rents" for offices.

What's next: Moody's Analytics predicts that effective office rents in Silicon Valley and New York will plummet in 2021, despite only dropping 0.7% in 2020.

  • The vacancy rate will rise to 19.4% in 2021 — surpassing the previous high of 17.6% from 2010 — and hold steady in 2022, per Moody's.
  • "The average effective office rent is projected to decline by 7.5% in 2021 before steadying in 2022," Moody's said.
  • "We do not expect average effective office rents to reach their pre-pandemic levels until 2026."
Go deeper