A famous street in a San Francisco suburb tops the list of most expensive U.S. streets for office space in 2013, with average rents reaching almost $111 per square foot.
Average office rents on Menlo Park's Sand Hill Road, known for its concentration of high-tech venture capital firms, maintained its number one spot in Jones Lang LaSalle's ranking of the most expensive office markets across the U.S., according to a report from Jones Lang LaSalle.
As the tech industry grows, the San Francisco Bay area has three streets in the top-10 rankings -- California Street, at number six with a 45.3 percent increase to $62 per square foot, and third-place University Avenue join the top ranking Sand Hill Road -- more than any other office market, JLL reports. (A recent study by CBRE found that the growth of tech companies is driving up office rents in tech-centric markets.)
New York City's Fifth Avenue, remaining at number two, is the most expensive central business district street in the U.S. with average rents of approximately $102 per square foot. Coming in third in the survey is Northern California's University Avenue in Silicon Valley with average rents reaching $95 per square foot.
"This year's results are particularly interesting because, not only do they demonstrate the standard real estate rule that location is everything, but they also reflect the overall office space demand trend in the U.S.," said John Sikaitis, managing director of office research at JLL. "We are seeing a slight uptick in occupancy rates as a result of the rate of business growth in the economy combined with a lack of new development."
Across the U.S., rental rates on the most expensive streets increased an average of 10.9 percent since the inaugural study in 2011 as markets recover and a slowdown in new construction led to supply constraints, the firm says.
The energy sector is driving up rents on Houston's Louisiana Street and Dallas' McKinney Avenue, with rents increasing 11.8 and 5.4 percent, respectively.
In 2013, vacancy rates are quickly decreasing in markets hit worst by the recession including Brickell Avenue (Miami), Peachtree Street (Atlanta), Fayetteville Street (Raleigh) and Boy Scout Boulevard (Tampa).
Single-digit vacancies were reported by 14 streets in the report. Midwestern markets remain the most affordable -- Chicago's Wacker Drive is the most expensive street in the region with an average rent of $36 per square foot.
2013 U.S.s Most Expensive Streets for Office Space