Prime office costs rise as rents drive global growth

The cost of prime office space continued to climb in the third quarter of 2025, rising by 0.8 percent worldwide, according to Savills’ latest Prime Office Costs report. The increase takes the total average rise in costs over the past year to 3.3 percent, with rental growth now the main factor behind the trend. Savills reports that 25 of the 40 markets it tracks recorded higher average net effective occupier costs, which include rent and fit-out expenses. While global rents increased by an average of 0.9 percent during the quarter, fit-out and associated costs were largely unchanged, rising only 0.03 percent.

In the Asia Pacific region, costs rose by 1 percent, though performance varied widely. Cities in China recorded an average decline of 1.9 percent due to oversupply and weak business confidence. By contrast, Kuala Lumpur saw a 6.5 percent rise in Q3, following a 4.4 percent increase in Q2, as tech companies and multinationals competed for limited prime space.

North American markets recorded a more modest average rise of 0.6 percent, following 1.4 percent growth in the previous quarter. San Francisco led the region with a 1.5 percent increase, driven by AI-related demand, while Toronto saw a 2 percent decline as higher vacancy rates and sublease availability created opportunities for occupiers to secure better space on favourable terms.

In Europe and the Middle East, no markets saw a decline in Q3, with overall costs rising by an average of 0.9 percent. Frankfurt recorded the strongest growth at 3.6 percent as limited availability of large prime floorplates pushed rents higher. In the Middle East, continued competition for high-quality space drove quarterly increases of 2.1 percent in Dubai, 2 percent in Riyadh and 1.6 percent in Cairo.

Rick Schuham, CEO of Global Occupier Services at Savills, said that rental increases are now the main driver of higher costs. “For the last few years, prime office cost growth in many markets was largely driven by rising fit-out costs,” he said. “With fit-out costs stabilising, limited supply and growing occupier demand are now giving landlords the confidence to raise rents.”

Sarah Brooks, Associate Director in Savills World Research team, noted that rental growth has regained momentum after slowing in 2024. “Rents are climbing more sharply in EMEA compared to North America, while Asia Pacific shows a clear split,” she said. “When China and Hong Kong are included, prime office rents in the region have fallen by 5.9 percent since early 2020, but excluding them shows an 8.6 percent increase across other APAC cities.”

Savills says the overall outlook for the prime office sector remains one of steady growth, supported by resilient demand and limited availability of top-quality space in many key global markets.