3 Bay Area Streets Have The Most Expensive Office Rents In The U.S.
Despite the challenges facing the Bay Area’s office sector, three of the most expensive streets for office space are located in the region.
Sand Hill Road in the Menlo Park submarket is the most expensive street in the U.S., University Avenue in the Palo Alto submarket is the fourth-most expensive — and Mission Street in San Francisco’s South Financial District is the sixth-priciest street for office space, according to a JLL report.
The average asking rent on the stretch of Sand Hill Road that runs through Menlo Park is approximately $168 per SF, while the highest rent achieved on the street totals $204 per SF. These numbers represent a 144% premium to the overall Peninsula submarket, according to JLL research.
Venture capital firms, early-stage AI startups and other tech companies fueled leasing activity on the Peninsula last year and into Q1, keeping rents on Sand Hill Road in Menlo Park.
“We're still seeing active leasing requirements amongst VC firms,” JLL Senior Director of Research Alexander Quinn said. “Venture capital firms may have slowed down their investment activity, but their fundraising efforts have been relatively strong.”
In Silicon Valley, asking rents on University Avenue in Palo Alto are $109 per SF, and $150 per SF was the highest rate paid for a property on University Avenue.
In San Francisco, where the overall vacancy rate is in the mid-30% range, rents remain high for trophy assets with views of the city and bay, Quinn said. Asking rents were approximately $91 on Mission Street in the southern part of the Financial District, while $140 a SF was the highest rent a tenant paid for Mission Street space in this area.
“While we see a vacancy rate of 34% in the city of San Francisco, trophy buildings and especially what we define as the top 20 buildings in the city, are showing themselves to be resilient, especially on anything that has an upper floor,” Quinn said. “Floors 30 and above, right on the waterfront, those rents and vacancies have been much more resilient than the overall market.”
Quinn said the Mission Street corridor is a small, confined area with a high concentration of newer, high-quality supply, including the Salesforce Tower, 550 Mission St., and others.
Rents for Class-B or C assets in San Francisco are sliding considerably more than those of trophy buildings, Quinn said.
“As we see a softening of the market, these spillover markets are the ones that are struggling the most, whereas the core markets and the core buildings are doing better,” he said.
The second-highest priced street for office space was New York’s 34th Street in the Hudson Yards submarket at an asking rate of $162.43 per SF, followed by West Palm Beach, where owners are asking $134 per SF for office space on Royal Palm Way in the Palm Beach downtown submarket, according to the JLL report.
