In a post-pandemic world, commercial real estate conditions continue to fluctuate. However, at the close of 2022, previous supply chain disruptions seemed to have eased, hinting at greater stability for the coming years.
With that in mind, CommercialSearch examined the state of more than 1,000 submarkets across the U.S. by looking at office asking rates from last year’s final quarter. Read on for the most expensive submarkets in the country:
Top 10 Most Expensive U.S. Office Submarkets
The most expensive U.S. submarkets at the close of 2022 were clustered in NYC’s Manhattan and California. Across the 10 priciest submarkets, average asking rents began at $66 per square foot, rising to $117. Only two submarkets breached the $100 mark, and the average price across the top 10 sat at $83.6.
#1 Plaza District, Manhattan, NY
Manhattan’s Plaza District took the number one spot by a fair margin, with the average office asking rate sitting at a wallet-emptying $117 per square foot in Q4 2022.
#2 Menlo Park, San Francisco – Peninsula, CA
Taking second place, asking rates in San Francisco’s Menlo Park submarket averaged $114 per square foot. Indeed, submarkets in San Francisco and the Bay Area took up six of the top 10 spots.
#3 Palo Alto, Bay Area – South Bay, CA
The average asking rate in Palo Alto in California’s South Bay Area sat at just under $100 at the close of 2022, with lease rates typically going for $97 per square foot.
#4 Redwood City, San Francisco – Peninsula, CA
Prices drop somewhat as we reach Redwood City in fourth place. Again, another San Francisco submarket, asking rents averaged $86 per square foot here.
#5 Century City, Metro Los Angeles, CA
#6 San Francisco – South Financial District, San Francisco – Peninsula, CA
LA’s Century City takes joint fifth/sixth place alongside San Francisco’s South Financial District. Office lease rates averaged $74 in both submarkets in Q4 2022.
#7 Gramercy Park, Manhattan, NY
Alongside the Plaza District, Manhattan’s Gramercy Park is the only non-Californian submarket to make the top 10, with an average office asking rate of $69 per square foot.
#8 Beverly Hills, Metro Los Angeles, CA
LA’s Beverly Hills is close behind, with rates of $70 per square foot.
#9 Redwood Shores, San Francisco – Peninsula, CA
Heading back to San Francisco, the Redwood Shores submarket takes the penultimate spot in the rankings, having average office asking rates of $68 per square foot.
#10 San Mateo, San Francisco – Peninsula, CA
Staying in San Francisco, the San Mateo submarket rounds off the top 10, with rents averaging $66 per square foot at the close of 2022.
Western Submarkets Dominate the Rankings
Having examined the top 10, it’s plain to see that Western Submarkets are among the most expensive in the country, particularly those in California. As well as taking eight of the top 10 spots, Western submarkets made up 31 spots in the top 50 ranking.
Of those, Californian submarkets took 26 spots, with 10 in Los Angeles, seven in San Francisco, five in San Diego, and four in the Bay Area. Across the Golden State, office lease rates ranged from $44 per square foot in downtown San Diego to a whopping $114 in San Francisco’s Menlo Park submarket.
Other Western submarkets to make the top 50 include four from Seattle and one from Denver. Seattle’s Bellevue submarket boasted the city’s highest office asking rates in Q4 2022, with an average of $50 per square foot, seeing it take 30th place in the rankings. Asking rates averaged $46 in Central Denver’s LoDo submarket, seeing it take 38th place.
Florida & Texas Are the Priciest Southern Submarkets
Despite no submarkets hailing from the South reaching the top 10, 12 breached the top 50. The most expensive Southern submarket in terms of office lease rates at the close of 2022 was Austin’s Downtown, where rates averaged $58, seeing it take 16th place overall. Two other Texas submarkets reached the top 50: Austin South (34th place) and Uptown/Oak Lawn, North Dallas (43rd place), with rates of $48 and $44 per square foot, respectively.
Florida boasted five submarkets in the top 50, with Downtown West Palm Beach being the priciest. Here, rates averaged $57 per square foot, seeing this Sunshine State submarket reach 18th place in the top 50.
Outside of Texas and Florida, the other Southern submarkets that made it into the top 50 include East End Washington, D.C., which took 23rd place with rates averaging $55 at the close of 2022. Finally, Georgia’s West Atlanta submarket rounded off the top 50, with average office lease rates of $41 per square foot.
Manhattan & Boston Lead in the Northeast
While Manhattan’s Plaza District was the country’s most expensive submarket, the Northeast accounted for only seven entries in the top 50. Six of these submarkets were located in Manhattan, while the remaining one was in Boston.
Both Plaza District and Gramercy Park made the top 10, with asking rents averaging $117 and $69 per square foot, respectively. Outside of the top 10, Manhattan’s Murray Hill saw office leases of $60 per square, taking the 13th spot. Meanwhile, Chelsea (Manhattan, NY) was the cheapest North Eastern submarket in the top 50, with average rates of $44 per square foot, taking 44th place.
Outside NYC, Boston’s Downtown submarket ranked 29 out of 50, with asking rents averaging $51 per square foot at the close of 2022.
