Prime office rents around the world continue to rise

by • News, Property

ental growth for prime office space around the world accelerated in the first quarter of 2025, increasing on average by 0.6 percent, following a 0.3 percent increase in Q4 2024Rental growth for prime office space around the world accelerated in the first quarter of 2025, increasing on average by 0.6 percent, following a 0.3 percent increase in Q4 2024, says Savills. Fit out costs also rose by 0.7 percent in the first quarter, following a 0.2 percent increase in Q4, as demand for top quality office space continues unabated. According to Savills Q1 2025 Prime Office Costs report, in the first quarter average ‘all-in’ net effective costs (rent plus fit-out costs) rose by 0.5 percent, with 21 of the 40 locations monitored recording an increase, continuing a moderate upwards trend of 3.3 percent over the last year.

The international real estate advisor says that trends in prime office costs vary across the three global regions. In Asia Pacific, net effective costs held steady overall with a 0.1 percent rise in Q1, as rates across China declined in the face of a muted economic outlook. However, APAC’s other markets saw growth, including Mumbai, which recorded a 5.2 percent increase against very low vacancy rates. Meanwhile, EMEA saw above-average cost increases, recording 1.9 percent growth in net effective costs to occupiers. Riyadh, Dubai, Paris and Frankfurt all registered increases exceeding 4.0 percent in Q1, with the latter recording the strongest quarterly cost growth across all the 40 cities Savills examined at 7.4 percent, reflecting sustained demand for premium space.

North America recorded an average -0.8 percent net effective cost change in Q1 as higher vacancy rates put downwards pressure on most markets. However, Los Angeles’s Century City bucked the trend and saw a 4.2 percent increase in net effective costs due to continually high demand and rising fit out costs this quarter.. In addition, in some US cities such as Chicago, Savills says that decreasing net effective costs do not reflect slowing rents or declining fit out costs; instead it is due to an uptick in landlord contributions toward fit-outs, which reduced overall net costs to occupiers.