Vancouver and Toronto are placed 69th and 70th in JLL’s 2022 rankings of premium office rents in 134 markets worldwide. Montreal is slotted 100th in the annual survey of the highest achievable rent within the premier building in the city’s or sub-market’s most prestigious office district.
All three Canadian cities are categorized as “value” markets with total occupancy costs below USD $60 per square foot (CAD $81 psf ) — status they share with nearly 60 per cent of the survey base. In contrast, just 19, or 14 per cent, of markets are considered “high-end” with occupancy costs greater than USD $100 psf. The remaining 35 markets are classified as “mid-level”.
Central Hong Kong and Midtown New York are holdovers from 2021 with the two priciest premium rents, but with a wider gap this year between total occupancy costs of USD $259 psf in top-ranked Hong Kong versus USD $220 psf in New York. London’s West End, Beijing’s Finance Street and California’s Silicon Valley fill out the top five spots with occupancy costs ranging from USD $182 psf in London to USD $149 psf in Silicon Valley.
Across the entire survey base, JLL reports a 4.8 per cent year-over-year increase in premium office rents. JLL analysts suggest that evidence aligns with findings from the firm’s global survey of workplace trends, conducted earlier in the year.
“With 77 per cent of corporate real estate professionals agreeing that investing in quality space is more important than increasing space, upward pressure on rents for premium space is likely to continue,” they project. “Flight to quality extends to environmental sustainability features, with green building certification now a de facto requirement of premium office space: 87 per cent of premium office buildings in our survey have a certification in environmental sustainability, such as LEED, BREEAM or NABERS, up from 84 per cent last year.”
In other trends, the strengthening U.S. dollar juggled the rankings, pushing occupancy costs upwards in several U.S. markets, while European and some Asian markets slipped in the positioning relative to last year. As well, analysts point to climbing rankings for the Middle East markets, Dubai (16th), Riyadh (46th) and Abu Dhabi (54th).
Premium office rents in Vancouver and Toronto are pegged at USD $54 psf (CAD $72.90 psf), sandwiched between Amsterdam at USD $55 psf and Hangzhou at USD $53 psf. The nearest U.S. markets on the scale are San Diego, ranked 59th with a premium office rent of USD $59 psf, and Denver, ranked 75th with a premium office rent of USD $51 psf. Other U.S. cities with premium rents falling below Toronto’s, but above Montreal’s include: Nashville; Houston; Atlanta; Philadelphia; Phoenix; Baltimore; and Charlotte, which is ranked just above Montreal with a premium office rent of USD $40 psf.
Montreal’s premium rent of USD $39 psf (CAD $52.65 psf) places it atop Lisbon, which posts a premium rent of USD $38 psf. Montreal outranks two other U.S. cities: Minneapolis (104th) and Detroit (118th) as well as several European and South American capitals: Helsinki; Prague; Warsaw; Budapest; Bucharest; Bogota; and Santiago. Meanwhile, this year’s five best bargains for premium office space are found in Rio de Janeiro, Hyderabad, Durban, Johannesburg and Cape Town with occupancy costs ranging from a high of USD $18 psf in Rio to USD $15 psf in Cape Town.
Looking at tenancies, banking and financial services are predominant in the priciest space — accounting for 72 per cent of occupancy in high-end markets. That quotient falls to just 37 per cent across the entire premium office survey base. Professional and business services occupy a consistent 22 to 23 per cent share of premium space in mid-level and value markets, but just 11 per cent of high-end premium space. Technology firms occupy about 19 per cent of all premium space.
