The most expensive U.S. office submarket in 2019 was Mountain View – Shoreline in Silicon Valley with an average price per square foot of $1,554—almost $300 per square foot more than the nearest contender. The submarket was propelled to first place by Google’s acquisition of three buildings totaling more than $300 million; the properties at 1842 North Shoreline Boulevard, 900 Alta Avenue and 1053 Joaquin Road will add 204,000 square feet of office space to the tech giant’s Mountain View campus.
The $600-million purchase and leaseback of the Zynga headquarters by Beacon Capital Partners also turned heads. The property at 650 Townsend Street is part of the San Francisco – SOMA submarket, which occupies the seventh spot on our list, between San Francisco’s South Financial District at number six, and the city’s North Financial District at 10th.
Fellow Silicon Valley submarkets Palo Alto and Sunnyvale – West barely missed the top 10, landing in the 11th and 13th spots, respectively.
Overall, office submarkets in California fared very well, making up half of the top 10. The state also logged 36 entries out of the total 100.
However, although California led in the number of submarkets in the top 10 and top 100 lists, it was surpassed by the state of New York in average sale price. In 2019, a square foot of office space in New York state went for an average of $515.
New York City’s Plaza District was a particularly popular submarket, seeing a $1,260 per square foot average price from 12 sales. This includes the largest single-property sale of 2019—the Coca-Cola Company Building’s double sale—which was purchased by Wafra for a whopping $909 million, only to be sold just a few weeks later to SHVO for an additional $28 million on top of that. These sales amounted to more than $2,900 per square foot, pushing the Plaza District to number two on our list.
Only three New York State submarkets made the top 100, and all are in Manhattan; all three, however, were also in the top 10.
Office space around the private Gramercy Park is especially sought after, and the five deals in this submarket secured the number five spot. A square foot of office space in Gramercy Park averaged $975 in 2019.
Not far behind, the Chelsea submarket made it to #9 on our list with an average price per square foot of $857. Here, Google’s purchase of The Milk Building at 450 West 15th Street in May made headlines with its $591 million price tag and an average price per square foot of $1,820.
The top 10 list of most expensive submarkets also included Cambridge, MA, at #4, and Lake Union, WA, finished at #8, seeing a total of $1.6 billion trade hands in eight office building deals. Cambridge was situated higher on our list than Boston’s central business district (CBD), which landed at #16.