US cities are among the fastest-rising occupier cost markets globally

The international real estate advisor says that US cities are among the fastest-rising occupier cost markets globally, led by New York and Dallas. These markets are showing strong demand for best-in-class, highly amenitised space, while supply for the highest quality offices remains constrained.

New York (Midtown) recorded a 4.9% increase in occupier costs this quarter, taking annual increases to 13.7%. At $225 per sq ft, Midtown is now the fourth most expensive market Savills monitors, behind London's West End, Hong Kong and Tokyo, driven by higher face rents and shorter rent-free periods.

Office space at the top of the market is extremely limited, with vacancy across Midtown's trophy buildings falling below 1.9%, from 17% at the end of 2024.

This scarcity is pushing rents to new highs. In what is reported to be New York's most expensive office letting on record, hedge fund Castle Hook Partners has agreed a 15-year lease on the top two floors of Related's 625 Madison Avenue tower at around $375 per sq ft. The building, not due to complete until 2029, highlights how far ahead businesses will commit to secure the best space.

The Asia Pacific region recorded a modest 0.9% increase in occupier costs this quarter, although the regional average continues to mask a widening divergence between mainland China and the rest of the region. Occupier costs across the four mainland Chinese markets Savills monitors (Beijing, Guangzhou, Shanghai and Shenzhen) fell by -0.7% in Q3 and are now -4.4% lower than a year ago. Excluding China, occupier costs in the region increased by an average of 1.4% over the quarter and 7% annually, highlighting continued strength across many of Asia Pacific's established office markets.

Europe, the Middle East and Africa recorded a 0.6% increase in net effective occupier costs. Prague and Warsaw recorded the region's largest quarterly increases in occupier costs, rising by 4.5% and 4.2%, respectively. Elsewhere, Dubai rose by 1.6% on higher fit-out costs, while London City saw a more modest 0.5% increase.

Rick Schuham, CEO of Global Occupier Services at Savills, comments: “Across the globe, prime office markets remain characterised by a flight to quality. This framing is moving to “fight for quality” as the scarcity is producing competition amongst tenants for that limited supply. Organisations continue to prioritise premium offices, concentrating demand on the best buildings in the most desirable locations. This is particularly evident in markets such as New York, Mumbai and Warsaw, where limited availability of best-in-class space and resilient demand continue to place upward pressure on costs.”

Sarah Brooks, Associate Director in Savills World Research, adds: “Prime offices act as a means of advancing a variety of important goals and objectives for businesses around the world. Our recent occupier strategy report highlights some of these key value-adds, such as the way office space builds culture and relationships or fosters innovation.” 

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Notes to Editor

*Prime is used to describe the very top tier of Grade A office space in a market, typically the office space demanding the highest 5-10% of rents in that market: the term is more commonly used in EMEA and APAC with the term ‘trophy’ preferred to describe the same space in North American markets. Grade A offices are the most modern offices, typically brand new space or very recently refurbished offices that offer the highest amenities and facilities, strong sustainability credentials, advanced infrastructure and are in a central location.

Savills 'Global Occupier Markets: Prime Office Costs’ presents a quarterly snapshot of occupancy costs for prime office space throughout the world, as provided by our expert, local tenant representation professionals and researchers. The adjusted annual all-in occupancy cost represents real-time transaction terms for 20,000 sq ft (2,000 sq m) of usable space based on a basket of the top five most expensive properties to calculate prime average. All costs are reported in a standardised format of USD per sq ft of usable space per annum at a fixed exchange rate to account for variations in currency, reflect local payment protocols, and adjust for measurement practices across the globe. We have also factored in the credit value to the tenant generated from abated rent and the cost associated with fitting out the premises in order to provide an ’all in’ total occupancy cost in USD per usable square foot. The fit-out costs were gathered from local Savills teams assuming the leasing scenario described above, plus the following: i) 30% cellularisation with the remainder of space open plan, ii) construction and cabling only (no furniture or professional fees). Data as of September 2026.