Wednesday, 28 February, 2024

The 5 Most Expensive Cities to Lease Commercial Real Estate


Reading Time: 13 minutes

Article Highlights:

  1. Tech areas are a strong contributor to high leasing prices and growth.
  2. If you’re trying to find a property to lease for a reasonable price, consider looking just outside of major metros.
  3. Larger populations typically mean higher demand and higher leasing prices.
  4. There is little correlation between the average leasing price and the highest leasing price in an area. Often the highest-priced property can be double or even triple the average price per square foot
  5. There’s a lot more that goes into an “expensive” leasing city besides the average price for square foot; growth metrics can be just as important to consider. 

Commercial real estate is a hot commodity these days. Cities all over the country are seeing a rise in prices as businesses compete for limited space. 

If you’re looking to lease some commercial property, you’ll want to avoid these five cities: They are among the most expensive in the country.

We took a look at the average listing rates based on individual metros and paired that with various analytics and growth trajectories to put together this top 5 list. 

So while they might not be the most expensive areas in order, they should all be considered when determining your budget.

Read on for more information about why these cities, from most to least expensive, are so costly and what your other options might be.

#1 – New York, NY: The Big (Expensive) Apple

Important Data:

 

  • Average price per square foot (office): $71.87 per square foot.
  • Average Household Income: $67,046.
  • Population Demographics (World Population Review)
    • White: 42.73%.
    • Black or African American: 24.31%.
    • Other race(s): 22.5%.
    • Asian: 14.09%.
  • Key Takeaway: Businesses are willing to pay more for a property because they believe that they can recoup those costs by charging higher prices for their goods and services (high cost of living).

The first city on our list is New York, NY. There’s no surprise here: New York is one of the most expensive cities to live in overall.

If you’re looking to lease property in New York, be prepared to pay top dollar. The prime real estate market in New York is one of the most competitive in the world, and prices have been on the rise in recent years.

While there are a few areas where you can find relative bargains, in general, you should expect to pay a premium for any property located in a desirable neighborhood.

With that said, leasing property in New York can be a great way to get your foot in the door of the city’s competitive leasing market. So long as you’re prepared to pay the price, you can enjoy all that this vibrant metropolis has to offer.

Important City Statistics

Manhattan commercial real estate alone has an average of $71.87 price point per square foot.

In today’s world, the most expensive commodity is not gold or oil, but prime real estate. 

And the priciest property on the market right now, according to MyEListing.com data, is 550 Madison Avenue in New York City, which has been listed for $210 per square foot.

That’s near twice the price of the next most expensive property, which is located in Hong Kong. So what makes this particular piece of real estate so valuable?

For starters, it’s located in one of the most desirable zip codes in the world. The building itself is also highly sought-after, with a classic pre-war design and views of Central Park.

In addition, the property is being sold by a prestigious real estate firm, making it even more appealing to wealthy buyers. With all these factors combined, it’s no wonder that 550 Madison Avenue is fetching such a high price tag.

What’s Driving Up Prices?

New York is one of the most expensive cities in the world, and the high cost of living is a major factor driving up commercial real estate prices.

The city’s high rents and property taxes make it difficult for businesses to afford office space, and many companies are being forced to move to cheaper locations outside of the city.

The high cost of living is also making it difficult for people to afford to live in New York, and many are leaving the city in search of cheaper options. As a result, the demand for commercial real estate is decreasing, which is causing prices to rise. 

The high cost of living in New York is a major problem that is having a negative impact on the city’s economy.

Businesses are willing to pay more for property in New York because they know that they can recoup those costs by charging higher prices for their goods and services. The city’s large population and tourist traffic also contribute to the high demand for space.

Alternatives

For many people, the high cost of living in New York City is simply too much to handle. If you find yourself priced out of the market, it may be time to look for cheaper options in the surrounding area.

New Jersey and Connecticut are both great choices for those who want to be close to the city without having to pay Manhattan prices. 

In addition, both states offer a wide variety of lease options, so you’ll be sure to find something that fits your budget.

Brooklyn, NY is another option for those looking to lease property without breaking the bank. 

This borough has seen a surge in popularity in recent years, driving up prices. However, it’s still cheaper than Manhattan and offers a unique vibe that many businesses are looking for.

#2 – San Francisco, CA: A Tech Boom and Commercial Leasing Doom?

Important Data:

 

  • Average price per square foot (office): $63.71 per square foot.
  • Average Household Income: $119,136.
  • Population Demographics (World Population Review):
    • White: 46.41%.
    • Asian: 34.40%.
    • Black or African American: 5.21%.
    • Other race(s): 13.98%.
  • Key Takeaway: Tech start-ups are fueling a rush of business and a spike in the cost of living. If you’re not in tech, seek calmer waters.

San Francisco, CA is another city with high lease prices. 

This is due in part to the city’s booming tech industry. Many start-ups and tech companies are based in San Francisco, driving up demand (and prices) for commercial real estate.

If you’re in the tech industry, there’s a good chance you’ve considered leasing property in San Francisco. 

After all, the Bay Area is home to some of the world’s most innovative companies, and it’s the perfect place to test out new products and services.

However, there are a few things you should keep in mind before signing on the dotted line.

  1. Leasing rates in San Francisco are notoriously high. You’ll need to be prepared to shell out top dollar for even the smallest office space.
  2. Competition for talent is fierce, so you may need to offer potential employees a significant salary premium in order to lure them away from other companies.
  3. The cost of living in San Francisco is also quite high, so your employees will need to be paid accordingly.

Overall, leasing property in San Francisco can be a great way to get your tech business off the ground, but it’s important to go into it with your eyes wide open.

If your business is in the tech industry, you may have no choice but to lease property in San Francisco. 

However, if you’re not in the tech industry, you may want to consider another city on our list.

Important City Statistics

If you’re considering leasing in San Francisco, you’re likely aware that you’ll be paying a premium for the privilege. 

 

The average price per square foot in San Francisco is $63.71, making San Francisco commercial real estate some of the most expensive in the country.

However, there are a few factors that can help to offset the high cost of living:

  • Many leases include utilities in the monthly rent, which can save tenants a significant amount of money.
  • Many businesses are located in San Francisco, which can provide opportunities for employment and internships.
  • The city is home to a number of world-class museums and cultural attractions, providing residents with an enriching experience. Despite the high cost of living, San Francisco remains an attractive destination for many leaseholders.

Meanwhile, there was a listing for the Offices at Springline North for $159.96 per square foot

To give that some context, that’s over double the average price.

What’s Driving Up Prices?

The cost of living in San Francisco has been on the rise for years, and there is no sign of it slowing down anytime soon. The main factor driving up prices in the city is the booming tech industry.

Many businesses in this sector are willing to pay high prices for a property because they know they can recoup their costs by charging high prices for their goods and services. 

This pricing dynamic has led to a situation where many people who work in the tech industry can afford to live in San Francisco, but everyone else is being priced out.

As a result, the city is becoming increasingly polarized, with a growing gap between the rich and the poor. 

Unless something changes, it is likely that this trend will continue, making San Francisco an increasingly difficult place to live for those who are not part of the tech elite.

The city’s large population and tourist traffic are also contributing to the high demand for space.

Alternatives

For anyone looking to lease property in the Bay Area, Oakland is a great alternative to consider. This city has many of the same features as San Francisco (such as its proximity to Silicon Valley), but it’s much cheaper.

According to a recent report from the National Association of Realtors, the median price for a one-bedroom apartment in Oakland is $2,000, compared to $3,500 in San Francisco

This makes Oakland a more affordable option for those who want to live in the Bay Area without breaking the bank.

In addition to its lower cost of living, Oakland also offers a variety of other appealing features, such as a diverse population, great weather, and an abundance of outdoor activities. 

As a result, this city is an ideal choice for those who are looking for an affordable place to live in the Bay Area.

San Jose, CA is another option for those looking to lease property in the Bay Area. This city is home to many tech companies and start-ups, but it’s not as expensive as San Francisco.

#3 – Austin, TX: Huge Growth Comes at a Price

Important Data:

 

  • Average price per square foot (office): $42.29 per square foot.
  • Average Household Income: $80,954.
  • Population Demographics (World Population Review):
    • White: 72.63%.
    • Black or African American: 7.83%.
    • Asian: 7.59%.
    • Other race(s): 11.96%.
  • Key Takeaway: While not traditionally “expensive” compared to other cities on this list, Austin’s growth and the soaring cost of living might cause someone to think twice before investing in commercial property here. 

As any observer of the Austin, Texas real estate market knows the city is currently experiencing an explosion in population and office space. 

CommercialEdge reports that 148.2 million square feet of office space are currently under construction in Austin.

This represents a tremendous amount of growth for the city, and it is sure to have a major impact on the local economy. 

Businesses are flocking to Austin in order to take advantage of the burgeoning opportunity, and workers are moving to the city in droves in order to fill the new jobs that are being created.

The population boom is also causing housing prices to skyrocket, as more and more people compete for a limited number of homes. 

Just last year the U.S. Census Bureau announced that Austin was thefastest-growing major metro in the US.”

It is an exciting time to be in Austin, and it will be interesting to see how the city continues to grow and change in the coming years. 

You can find a wide variety of office spaces in Austin, from Class A to creative co-working spaces.

Important City Statistics

Leasing commercial real estate is a big financial commitment, and businesses in Austin are feeling the pinch. 

 

The average leasing price per square foot in Austin is $42.29 per square foot, making it the third most expensive city to lease commercial real estate on our list.

While that’s just above the $40 per square foot threshold, it’s important to note that leasing prices have been on the rise in recent years. 

In order to secure a good lease price, businesses need to be aware of the market trends and be prepared to negotiate. 

With a little knowledge and effort, businesses can find a commercial lease that meets their needs and budget.

What’s Driving Up Prices?

Austin is a booming city, and that growth is reflected in the city’s lease prices. The main drivers of high lease prices are the city’s large population and its status as a tech hub. 

The city is home to many businesses and start-ups, which drives up the demand for space.

Additionally, the city’s tourists contribute to the high demand for space. While the high lease prices may be a challenge for some businesses, they also present an opportunity for investors. 

By owning property in Austin, you can tap into the city’s growth and potential for profit.

Even though high lease prices may be a deterrent for some, they also represent a unique opportunity for those looking to invest in Austin’s future. 

Additionally, the city’s tourists contribute to the high demand for space.

Alternatives

San Antonio, TX is a great alternative for those looking to lease property in the Austin area. This city is home to many businesses and start-ups, but it’s not as expensive as Austin.

Houston, TX is another option for those looking to lease property in the Austin area. This city is home to many businesses and start-ups, but it’s not as expensive as Austin. 

You can find Houston commercial real estate for around $30.55 per square foot.

The average price per square foot is quite high in Austin. If you’re looking to lease commercial real estate, you may want to consider one of the alternatives listed above. 

San Antonio, TX, and Houston, TX are both great options for those looking to save money.

#4 – Washington, D.C: What Would You Pay to Be in the Nation’s Capital?

Important Data:

 

  • Average price per square foot (office): $40.20 per square foot.
  • Average Household Income: $92,266.
  • Population Demographics (World Population Review):
    • Black or African American: 46.31%.
    • White: 41.27%.
    • Asian: 3.98%.
    • Other race(s): 8.43%.
  • Key Takeaway: People pay a high price to live in the nation’s capital, but high tourism and a compact population have only caused leasing rates to grow over recent years.

Washington, D.C., is one of the most expensive cities in the United States to live in, with high lease prices that are driven in part by the city’s large population of professionals and government workers.

The high cost of living is a major challenge for many residents, especially those who are working to make ends meet. 

In addition to expensive housing, Washington, D.C., also has some of the highest costs for food, transportation, and healthcare.

While the city has a lot to offer in terms of culture and opportunities, its high cost of living is a major barrier for many people. 

Despite that many businesses choose to locate their offices in Washington, D.C. in order to be close to the nation’s capital. 

If you’re looking to lease property in Washington, D.C., be prepared to pay a high price.

Important City Statistics

Taking a look at the average price per square foot, you can expect a price point of around $40.20 per square foot for Washington, D.C. commercial real estate.

 

And while we’ve dropped below the $100 per square foot threshold, it’s hard not to gawk at a listing like One Freedom Plaza which was listed for $81.83 per square foot.

What’s Driving Up Prices?

The main drivers of high lease prices in Washington, D.C. are the city’s large population and its status as the nation’s capital. 

The city is home to many businesses and government offices, which drives up the demand for space. Additionally, the city’s tourists contribute to the high demand for space.

Alternatives

Arlington, VA is a great alternative for those looking to lease property in the Washington, D.C. area. This city is home to many businesses and government offices, but it’s not as expensive as Washington, D.C.

Alexandria, VA is another option for those looking to lease property in the Washington, D.C. area. This city is home to many businesses and start-ups, but it’s not as expensive as Washington, D.C.

Thus, the average price per square foot is quite high in Washington, D.C. 

If you’re looking to lease commercial real estate, you may want to consider one of the alternatives listed above. 

Arlington, VA, and Alexandria, VA are both great options for those looking to save money.

#5 – Boston, MA: Big Business Means Big Pricing

Important Data:

 

  • Average price per square foot (office): $37 per square foot.
  • Average Household Income: $76,298.
  • Population Demographics (World Population Review):
    • White: 52.82%.
    • Black or African American: 25.23%.
    • Asian: 9.67%.
    • Other race(s): 12.28%.
  • Key Takeaway: A long history of bustling business can mean a high cost of living, especially during peak tourist season. Finding a cheap property or place to eat might take some work.

Boston is one of the most expensive cities in the country for commercial real estate, yet its average price per square foot lands it last on our list. 

Like New York and San Francisco, Boston is a major business hub, which drives up demand (and prices) for office space. 

If you’re looking to lease property in Boston, be prepared to pay a premium.

However, there are some ways to save money:

  • Many businesses are open to subleasing excess space, so it’s worth checking to see if any sublease opportunities are available.
  • Boston’s market is relatively stable, so it may be worth considering a longer lease term to lock in rates.
  • Many leases include utilities in the monthly rent, which can save tenants a significant amount of money.

Overall, leasing property in Boston can be expensive, but there are ways to mitigate the costs.

Important City Statistics

As of May 2022, the average price per square foot for commercial real estate in Boston stood at around $37 per square foot. 

 

However, there are some properties that are listed for much higher prices. 

 

For example, Kendall Square at MIT–314 Main Street was being sold for $121.60 per square foot.

What’s Driving Up Prices?

Anyone who has visited Boston knows that it is a bustling city with a lot to offer. From historic landmarks to world-class museums, there is something for everyone. 

However, this also means that prices can be high, especially during peak tourist season.

The main factor driving up prices in Boston is the city’s large population and tourist traffic. With so many people vying for scarce resources, it’s no wonder that costs have sky-rocketed. 

Even basic necessities like food and lodging can be expensive, making it difficult for residents to make ends meet.

The good news is that there are ways to save money in Boston if you know where to look. With a little effort, you can find affordable accommodation and meals without sacrificing quality or experience.

The city is home to many large businesses and corporations, which drives up the demand for space. Additionally, the city’s tourists contribute to the high demand for space.

Alternatives

Cambridge, MA is a great alternative for those looking to lease property in the Boston area. This city is home to many of the same businesses and corporations, but it’s much cheaper.

Somerville, MA is another option for those looking to lease property in the Boston area. This city is home to many businesses and start-ups, but it’s not as expensive as Boston.

As you can see, the average price per square foot is quite high in these three cities. 

If you’re looking to lease commercial real estate, you may want to consider one of the alternatives listed above. 

Oakland, CA, Cambridge, MA, and Somerville, MA are all great options for those looking to save money.

How to Navigate Today’s Commercial Real Estate Leasing Market

These are the five most expensive cities to lease commercial real estate. If you’re looking to lease property in one of these cities, be prepared to pay a high price. 

However, there are alternatives to these cities that may be more affordable.

If you want to save money leasing a commercial property in one of these cities it’s important to remember:

  • Do your research: be aware of market trends and be prepared to negotiate
  • Look for alternatives: there may be cheaper areas in the same city or nearby
  • Be flexible on your lease terms: you may have to compromise on the length of your lease or the size of your space
  • Know your alternatives: it’s important to have a backup plan in case your first choice is out of your price range
  • Be prepared to negotiate: remember that the price you’re quoted is not always the final price

With a little effort, you can find a commercial lease that meets your needs and budget.

Methodology

All average prices per square foot of commercial real estate are based on MyEListing.com commercial listing data as well as publicly available commercial property pricing information.


Population demographics are based on information published by World Population Review.

 

Average household incomes based on U.S. Census information.

List & Browse Commercial Real Estate for Free on MyEListing.com!

You can list and browse commercial real estate for free right here on MyEListing.com by signing up for a free account.

 

You’ll also get unlimited access to accurate local market intelligence, customized property type alerts, comp software, and more.

 

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