The life sciences office space sub-category has seen tremendous growth over the past two years, benefiting from increased digitalization and investor appetite. This means successful life science startups are driving demand for a growing number of specialty office buildings. And life sciences have been hot in the Phoenix metro area, with the region claiming seven spots in the Top 100 most expensive office submarkets.
Our previous ranking of 100 Most Expensive Office Submarkets by average sale price found that the technology clusters of Silicon Valley and the most prestigious areas of Manhattan were the country’s top investment destination. So we turned to business advantage transaction data to see the direction the office market has taken since then and ranked the most expensive office submarkets in the United States based on average selling price per square foot in 2021.
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We found that office space in Cambridge, Massachusetts., was the most expensive in the United States in 2021, largely due to several large life science office sales. The rest of the list includes traditionally expensive areas in California and New York, with several other states also recording top 100 entries.
Cambridge, Massachusetts, overtakes West Coast and New York locations to become the most expensive office submarket in 2021
As one of the main hotspots of the life sciences boom, Cambridge, Massachusetts has risen to the top of our rankings for 2021 with a price per square foot of office space of $1,560, result of four highly publicized sales. In 2019, the submarket ranked fourth most expensive, with an average selling price of $1,074 per square foot. Since then, demand for life science office space in Boston has exceeded supply, vacancies as low as 1.1%. Cambridge, in particular, was the epicenter of life science growth in Boston. As a result, property valuations subsequently increased.
More specifically, two transactions greatly influenced the high average prices of the Cambridge submarket: purchase of Charles Park by Alexandria Real Estate Equities (AREE) in December and the acquisition of One Memorial Drive by MetLife Real Estate Investment in September. Each of the transactions totaled more than $2,000 per square foot. Charles Park would be converted to life sciences space by AREE, while One Memorial Drive is fully leased to two high-value technology tenants: Microsoft and InterSystems.
Elsewhere in the market, Offices in Boston in the central business district (CBD) sold for an average of $932 per square foot, lifting the submarket to fourth place. Meanwhile, the Seaport Innovation District ranked eighth, with office space trading here for an average of $820 per square foot. This Boston submarket has seen tremendous growth over the past decade and continues to attract significant investment, such as the $234 million sale of Two Drydock, which equates to a price of $954 per square foot. .
Boston also hosted last year’s biggest deal by total sale price — when AREE bought the Landmark Center from Fenway for $1.16 billion. The company spent about $1,221 per square foot on the office building, which it plans to redevelop for life sciences tenants.
Beverly Hills overtakes Silicon Valley tech clusters to become second most expensive office submarket of 2021
In previous years, Silicon Valley tech clusters stood out for their high average prices. However, a Southern California submarket was the state’s highest entry for 2021: four office buildings sold in Beverly Hills brought the submarket’s average price to $1,277 per square foot, making it the most expensive area to office space in Los Angeles.
Nonetheless, some of the Bay Area’s tech hotspots were still in the top 10, despite ranking lower. For example, offices in the Mountain View – East submarket sold for an average of $831 per square foot — just ahead of Cupertino, Calif., at $830 — putting the submarkets sixth and seventh on the list, respectively. Sunnyvale–West ranked ninth, with an average selling price of $806 per square foot.
Even so, Silicon Valley remains the undisputed tech capital of the United States. There have been several high-profile sales here last year, including LinkedIn’s $323 million purchase of its own global headquarters in Sunnyvale, which the company previously leased. The country’s major tech clusters still rank slightly lower than before the pandemic, although they remain among the most expensive areas in the United States for office space.
Manhattan’s Chelsea and Plaza District make the list of the top 10 most expensive submarkets; Greenwich Village is home to the most expensive deal of 2021
The Chelsea submarket in Manhattan reached third place with an average sale price of $1,046 across four sales, surpassing the $858 per square foot figure that brought Chelsea to 9th place in our 2019 ranking. sales recorded here last year included the transaction of 410 10and Ave., which saw 638,000 square feet of office space change hands for $1,493 per square foot — the most expensive sale in the submarket last year.
Also in Manhattan, office space in the Plaza District changed hands at an average of $846 per square foot, which ranked the submarket fifth. Major deals here last year included the sale-leaseback of the CBS Building by Harbor Group, in addition to three smaller properties that changed hands – 576 Fifth Ave., 590 Fifth Ave. and 645 Madison Ave.
The most expensive Offices in Manhattan the price per square foot sale was 860 Washington — the only transaction recorded in Greenwich Village last year — which cost Meadows Partners $2,134 per square foot. Notably, Greenwich Village didn’t make the list because it had fewer than three deals last year.
In the Midwest, an Illinois submarket also cracked the top 10 last year: Chicago’s West Loop averaged three sales at $804 per square foot. The sale of the smallest property of the three – 1100 West Fulton St. – resulted in a price per square foot of $935. Nearby, the 562,792 square feet of 1K Fulton Offices in Chicago sold for $354.75 million or $630 per square foot.
California submarkets dominate the rankings with 44 out of 100 entries
California was home to 44 of the nation’s 100 most expensive office submarkets, up from 36 entries in our 2019 rankings. California also recorded a statewide average price of $379 per square foot of space. office – the third highest of any state.
Southern and Northern California were relatively evenly split in the number of expensive areas. Los Angeles was the site of 16 of the most expensive submarkets in the country, while the Bay Area was home to 20 – three in downtown San Francisco and 17 elsewhere in the metro. Orange County also recorded four entries, with the Inland Empire adding two. Both San Diego and the Central Coast had a submarket in the top 100: Sorrento Valley with an average price of $441 and Goleta with $263 at #36 and #92, respectively.
Florida and Arizona Trail California in number of expensive submarkets
Nine Florida submarkets ranked among the nation’s 100 most expensive last year. Of these, the best-positioned was Miami’s central business district, which landed at 28th with an average office sale price of $504 per square foot. Next, Downtown West Palm Beach ranked 32nd ($488 per square foot) and Weston Submarket in Fort Lauderdale took 47th place ($382). Boca Raton and Tampa also recorded expensive submarkets in the top 100. At $213 per square foot, Florida had a significantly lower statewide price than California.
Arizona was next with seven out of 100 submarkets, the most expensive of which was North Gateway in Phoenix. It ranked 60th on our list, with an average price of $329 per square foot. The state’s six remaining entrances were all located in the Valley of the Sun, including Peoria, Deer Valley, Gilbert, Chandler, and Scottsdale’s South and Airpark submarkets.
Office assets in Arizona were trading at an average price of $209 per square foot, which was slightly cheaper than in Texas, where office sales averaged $212 per square foot last year . The Lone Star was home to four of the country’s most expensive office submarkets: Office space in downtown Austin sold an average of $612 per square foot; Northwest Austin sales averaged $364 per square foot; sales in Far West San Antonio closed at $294 per square foot, on average; and office buildings in East Dallas averaged $270 per square foot.
Next, Massachusetts, Washington State, and North Carolina tied with six entries each in the top 100. All Massachusetts submarkets were from the Boston area, with Downtown Boston (436 $ per square foot); Medford-Malden ($421); and Route 128 Central ($336) also make the list, in addition to the top 10 most expensive entries.
Similarly, four of the North Carolina entries were in Charlotte, while two were from the Carolina Triangle region. Last year, the priciest submarket in the state was Charlotte’s Midtown–South End, where office buildings sold for an average price of $464 per square foot.
In the Pacific Northwest, average statewide prices in Washington even surpassed those in California, reaching $392 across 67 transactions. Washington State’s six submarkets all originated from Metro Seattle: City CBD (#15), Bellevue (#17), North Seattle (#18), Belltown (# 20), the I-90 corridor (#41) and Bothell (#79). The high average prices seen in Washington State may stem from the fact that the entire Seattle metro is also a prime destination for life sciences, which significantly increases the benchmark average selling price of the ‘State. By comparison, California’s picture is more nuanced, with the state’s more expensive office submarkets offset by cheaper secondary areas in places like Sacramento and the Central Valley.
Only one submarket in the District of Columbia proper made the list – DC’s CBD at #54 with an average selling price of $353. However, two other submarkets in the Washington, D.C. metro area are also on the list: Virginia Square in Arlington at #38 and North Rockville, Md. at #97.