The suburban Los Angeles market ranked 20th globally in prime office occupancy costs at $102.05 a square-foot per year, according to a new report from CBRE Group Inc.
By comparison, downtown Los Angeles placed outside of the top 50 most expensive markets with a prime occupancy cost of $52.16.
The report notes that the rising cost of leasing prime office space accelerated across the globe in the year ended March 31 due to sustained economic growth and job gains plus limited availability of prime space in certain markets.
CBRE defines prime office occupancy costs as the cost – rent, local taxes and service charges – to occupy the highest-quality office space in each market’s best location.
Of the 122 markets tracked by CBRE, 85 registered cost increases.
“We have been seeing a continuous tightening of the urban office market in L.A., which has had a ripple effect on the suburban landscape,” CBRE broker Matthew Heyn said in a statement. “As space in areas such as West L.A. and Hollywood is harder to get and at increasing costs, demand for quality offices in more suburban areas has jumped, which in turn has pushed up prices.”
He added: “In addition, landlords are taking advantage of this opportunity by updating older properties, so they become a viable option for a multitude of tenants including entertainment, media, tech and financial firms. A great example of that is Warner Landmark (in Woodland Hills) where the ownership is remodeling the entire property to appeal to companies that are laser focused on attraction and retention of top talent in a highly competitive market.”
The most expensive office markets in the world were Hong Kong ($322 a square foot), Beijing ($177.05) and London ($222.70). In the United States, Manhattan was the most expensive market at $196.89.