Since the beginning of the pandemic, tenants across the U.S. have increasingly sought out spaces with high-quality offices and premier locations, not just for recruitment and retention purposes, but also to motivate employees to return to the office. This, in turn, has caused a surge in expensive streets across the country.
Jones Lang LaSalle (JLL), a global real estate services company, looked at different streets with prominent real estate all over the country in a recently published study.
The company found that the most expensive streets include globally-renowned thoroughfares that can enhance a firm's brand, prime transit arteries with significant infrastructure advantages, and notes of development and migration that have captured tenant demand. Because of this, many of these locations have been largely immune to challenges faced by the broader office market over the past four years.
California, New York and Florida emerge as the states in the top three of the most expensive streets as of 2024.
The first location is located in the San Francisco Peninsula in California. Sand Hill Road in Menlo Park has an average asking rent of $167.74 per square foot (p.s.f), with the highest rent being $204 p.s.f.
In New York, 34th Street in midtown Manhattan occupies the second place. In this Hudson Yards location, the average asking rent is $162.43 p.s.f, while the highest rent can go as high as $230 p.s.f.
Finalizing the top three is Royal Palm Way in West Palm Beach, Fla., where the average asking rent is around $134 p.s.f., with the highest rent going for about $145 p.s.f.
The top 15 of this study is primarily occupied by major cities in the U.S.
Atlantic Avenue in Boston, for instance, is at the eighth spot, with average asking rent being $89.96 p.s.f. and highest rent being $110 p.s.f. Comparatively, Brickell Avenue in Miami is at the ninth spot, with average asking rent being $86.83 p.s.f. and highest rent being $200 p.s.f. Meanwhile, Knox Street in Uptown Dallas has an average asking rent of $79.25 p.s.f. with the highest rent being $108 p.s.f.
In the case of the prime corridors of South Florida in Miami and West Palm Beach, migration of a large wave of financial services tenants from other gateway markets chasing an extremely limited supply has driven asking rents on Brickell Avenue 65% in the past two years.
Many of the most expensive streets see extremely elevated rents because unique circumstances create limits on new supply, and a robust tenant base remains competitive enough to drive rent growth, the study explains.
Looking ahead, with an impending stoppage of the new supply pipeline and a continued migration of tenants to higher-quality spaces and stronger locations, the report argues, office assets in prime streets in the U.S. are well-positioned to weather the remaining stages of the recovery.
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