HOUSTON—Just how much will companies pay to occupy one of the country's hottest office addresses? According to JLL's 2017 most expensive streets study, which looks at the priciest US office space, those high-profile strips command an average asking rent of $48.65 per square foot, a 46.9% premium compared to the rest of the country. And high rents are no deterrence as only 12.8% of the nation's most expensive real estate is vacant–a full 250 basis points lower than the US average.
While traditional drivers such the financial, law and consulting industries continue to dominate these high-price tag streets such as Fifth and Greenwich Avenues, tech is having a large effect. In fact, five of the top 10 streets in the ranking are tech hubs.
These national addresses have recorded exceptional pre-leasing on new developments, a trend mirrored in Houston. Locally, the most expensive street is Main Street, the only Houston street to make the list. Here, the average full-service office rent is $44.24 per square foot, a 44.8% premium over the market's average asking rent of $30.55 per square foot.
“In the ongoing competition for talent, many office tenants in Houston and in major metros across the US are seeking trophy and class-A-plus space,” John Pruitt, executive vice president with the JLL agency leasing group, tells GlobeSt.com. “This type of demand spurs new developments as well as significant capital improvements, both of which are happening in Houston's CBD. The diversification happening across the submarket and along corridors like Main Street is further establishing downtown Houston as a highly desirable place to office.”
Austin's Congress Avenue was the only Texas street to crack the top 10, commanding $58.20 per square foot. Following a few steps behind is Dallas' McKinney Avenue at number 14, with an average asking rental rate of $51.17 per square foot. This represents an 88.1% premium over the rest of the market.
Given that level of demand, it is worth asking what's drawing tenants to these properties, other than location?
“Developers recognize that these high-end amenities–roof decks, open and collaborative space, etc.–will draw the big name tenants that help developments stand out,” said Chris Roeder, JLL managing director of agency leasing.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
