Suburban Office Rent Growth Rate Outpaces Urban Counterpart

Although most metropolitan markets continue to suffer low office occupancy levels, rental rates for Class A properties have shown little indication of the sector’s troubles. The flight to quality, be it in the hard-hit central business districts or the suburbs, has had a bolstering effect on the price per square foot for premier accommodations in many cities. We wanted to better understand how suburban offices are doing compared to their urban counterparts so we looked at the difference in rental rates between the two. 

When looking at top-tier and secondary markets, the fact that not all metros draw a clear line between the downtown core and the suburbs muddies the suburban/urban rental-rate picture. Los Angeles, for example, now counts Downtown and Century City as its CBDs and boasts a hefty list of cities as part of its suburbs. And in New York City, Manhattan is the de facto central business district, while the remaining boroughs serve as part of the suburbs, which can also include areas of Connecticut and New Jersey. As for those markets that have distinct boundaries between the big city and the ‘burbs, the gap in Class A rental rates varies from moderate to substantial.

In the United States, average Class A rents in the suburbs have experienced year-over-year increases since the third quarter of 2022, while CBD rental rates have recorded a year-over-year decline in rents—until now. As of the second quarter of 2023, Class A rents in the suburbs and urban centers are both in growth mode,

Read more at Propmodo.

You May Also Like