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%, with 21 of the 40 locations monitored recording an increase, continuing a moderate upwards trend of 3.3% 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% 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% increase against very low vacancy rates. Meanwhile, EMEA saw above-average cost increases, recording 1.9% growth in net effective costs to occupiers. Riyadh, Dubai, Paris and Frankfurt all registered increases exceeding 4.0% in Q1, with the latter recording the strongest quarterly cost growth across all the 40 cities Savills examined at 7.4%, reflecting sustained demand for premium space.

North America recorded an average -0.8% 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% 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.  

Rick Schuham, CEO of Global Occupier Services at Savills, comments: “The prime office market continues to see gradual global net effective cost increases overall. While some US cities are reporting lower pricing, more generous landlord contributions are masking a continued increase in costs to secure prime space. Demand for top quality offices looks set to continue unabated, with development levels nowhere close to sating occupier requirements. We don’t expect this trend to reverse anytime soon.”

Sarah Brooks, Associate Director in Savills World Research team, adds: “While the development pipeline of prime office space remains low globally overall, and is set to continue to push rents upwards, most markets are developing some new prime buildings. Asian Pacific cities are seeing the strongest pipeline, with many cities we monitor in this region seeing five or more new best in class buildings completed, or planned. Even here though, a slight bump in supply is unlikely to be enough to affect rising rents and fit-out costs.”  

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Notes to Editor

*Prime is used to describe the very top tier of Grade A office space in a market, typically the office space demanding the highest 5-10% of rents in that market: the term is more commonly used in EMEA and APAC with the term ‘trophy’ preferred to describe the same space in North American markets. Grade A offices are the most modern offices, typically brand new space or very recently refurbished offices that offer the highest amenities and facilities, strong sustainability credentials, advanced infrastructure and are in a central location.

Savills 'Global Occupier Markets: Prime Office Costs’ presents a quarterly snapshot of occupancy costs for prime office space throughout the world, as provided by our expert, local tenant representation professionals and researchers. The adjusted annual all-in occupancy cost represents real-time transaction terms for 20,000 sq ft (2,000 sq m) of usable space based on a basket of the top five most expensive properties to calculate prime average.

All costs are reported in a standardised format of USD per sq ft of usable space per annum at a fixed exchange rate to account for variations in currency, reflect local payment protocols, and adjust for measurement practices across the globe. We have also factored in the credit value to the tenant generated from abated rent and the cost associated with fitting out the premises in order to provide an ’all in’ total occupancy cost in USD per usable square foot. The fit-out costs were gathered from local Savills teams assuming the leasing scenario described above, plus the following: i) 30% cellularisation with the remainder of space open plan, ii) construction and cabling only (no furniture or professional fees).