For Immediate Release – Savills’ latest Prime Office Costs report saw London’s West End retaining its position as the world’s most expensive prime office destination in Q1/2025, with net effective occupancy costs (rent plus fit-out costs) averaging US$299.39 per sq ft (psf) per annum.
Hong Kong followed closely at US$228.05 psf, while New York (Midtown) ranked third at US$206.67 psf. Despite economic headwinds, all three cities continued to command the highest costs globally, driven by sustained demand for prime office space and tight supply.
Globally, rental growth for prime office space* accelerated in the first quarter of 2025, increasing on average by 0.6%. Fit-out costs also rose by 0.7% during the same period, following a 0.2% increase in Q4/2024, reflecting occupiers’ ongoing demand for high-quality office environments.
Singapore’s net effective costs rose by 1% in Q1/2025. However, its ranking in Savills’ Prime Office Costs Index slipped from 6th to 9th place, as sharper cost growth was recorded in other global cities. Tokyo, meanwhile, registered marginal growth of 0.1% and maintained its 5th position.
The report found that overall net effective costs in Asia Pacific held steady with a 0.1% rise in Q1, as rates across China declined in the face of a muted economic outlook. However, other APAC markets posted growth, notably Mumbai, which recorded a 5.2% increase amid very low vacancy rates.
In the EMEA region, prime office costs rose by an average of 1.9%, with Riyadh, Dubai, Paris and Frankfurt all registering increases exceeding 4.0% in Q1. Riyadh, a new inclusion in the index, debuted strongly at 6th place, while Dubai remained in 8th position.
Beyond the traditional core markets, new entrants to the index this quarter include Prague, Warsaw, Cairo, and Boston, bringing the total number of cities surveyed by Savills to 40.
Alan Cheong, Executive Director, Research & Consultancy, Savills Singapore says, “Although Singapore’s ranking has fallen to 9th place, the underlying cost is still increasing, albeit at a lower rate. For 2025, we may still see cost increases as the supply of CBD Grade A offices is limited. However, we expect our rankings to hover around the same level as in Q1/2025.”
Sarah Brooks, Associate Director, Savills World Research 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.”
North America, by contrast, saw higher vacancy rates put downward pressure on prime office costs, with the region recording an average -0.8% change in Q1. However, Los Angeles’ Century City bucked the trend, seeing a 4.2% increase in net effective costs due to resilient demand and rising fit-out expenses.
In some US cities such as Chicago, Savills notes that decreasing net effective costs do not reflect slowing rents or declining fit out costs; but rather an uptick in landlord contributions toward fit-outs, which reduced overall net costs to occupiers.
Rick Schuham, CEO, Global Occupier Services, 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.”