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Or do they?
Space for your business never comes cheap, especially if you're slugging it out in a major city, where rents seem to rise ceaselessly. Data from commercial real estate analyst CoStar Group shows serious fluctuations in office and retail rent trends among major U.S. metro areas, and that not every hot region of the moment (hello, Pittsburgh) has rent spikes to match its rep. But if your business is in Charlotte or Seattle and you locked in a long-term lease long ago: Good move. Those cities' commercial rents have been rising fast, and show no signs of stopping.
Nothing Going On but the Rent
DATA CENTER
-5%
15%
10%
5%
Retail
Office
2017
2016
2015
2014
2013
2012
26%
49%
$36.52
$28.90
$49.71
$33.47
PRICE PER SQ. FT.
San Jose, Calif.
23%
53%
$27.91
$22.69
$35.15
$22.98
East Bay Area, Calif.
14%
22%
$39.86
$34.49
$54.87
$45.16
New York City
19%
47%
$41.21
$59.56
$40.47
San Francisco
Commercial Rent Trends
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Chicago, Detroit, Milwaukee, Minneapolis
San Jose, CA
SJ
East Bay Area, CA
EBA
New York City, NY
NYC
San Francisco, CA
SF
No one seeking retail or office space would call San Francisco or New York City affordable, but two of the nation’s most overheated real estate markets have seen rents stabilize. Office costs in the East Bay Area have risen sharply—suggesting companies are chasing more affordable space across the Bay and Golden Gate bridges.
The Hot Markets Cool Down
CALIFORNIA
San Jose
East Bay Area
NEW YORK
2%
4%
11%
<1%
1%
6%
8%
3%
-1%
13%
12%
7%
-<1%
16%
$15.19
$13.44
$19.51
$16.76
20%
$18.77
$17.88
$27.10
$22.53
$13.90
$13.50
$19.20
$16.99
9%
$16.69
$15.31
$23.01
$18.74
Detroit, MI
Chicago, IL
Milwaukee, WI
Minneapolis, MN
>-1%
-2%
Charlotte, Houston
SF, NYC, EBA, SJ
DET
CHI
MIL
MIN
Midwestern Thaw
Prices for office space in Chicago continue to rise, thanks to the move of key corporate headquarters from the suburbs to downtown—McDonald’s and Wilson Sporting Goods, to name two. The revitalization of Detroit remains a work in progress, but a stronger downtown is raising rents across the board.
-4%
17%
$19.89
$17.03
$26.70
$25.93
Houston, TX
35%
$17.41
$15.41
$24.45
$18.07
Charlotte, NC
Cinninati, Columbus, Cleveland
CHL
HOU
A Tale of Two Cities
There’s a Hurricane Harvey's worth of difference between these boomtowns—but even before Harvey, Houston’s boom resulted in overbuilding, which weakened office rent rates, says Garrick Brown, vice president of retail intelligence at Cushman & Wakefield.
$13.43
$12.73
$17.64
$15.48
Cleveland, OH
$14.77
$12.87
$18.61
$15.92
Columbus, OH
$12.50
$12.24
$17.36
$15.98
Cincinnati, OH
<-1%
CLE
COL
CIN
Austin, Seattle, Raleigh, Denver
One Region's Story
It’s hard to draw parallels among Ohio’s big cities—but these cities’ rents have, to some extent, been rising and falling in counterpoint to one another, suggesting that Columbus’s gain could be Cleveland’s or Cincinnati’s loss—and vice versa.
$19.31
$17.15
$23.60
$18.71
Raleigh, NC
27%
33%
$25.52
$20.15
$33.73
$25.35
Austin, TX
32%
21%
$22.67
$24.99
$20.67
Denver, CO
18%
$23.30
$19.70
$33.36
Seattle, WA
RAL
ATX
DEN
SEA
Pittsburgh, Philadelphia
Cincinnati, Columbus, Cleveland
The Next Tier Rises
These consistently hot markets are magnets for tech startups and upwardly mobile Millennials. All boast low unemployment, cultural amenities, and strong university roots—they’re prime alternatives for companies and citizens who, in other times, might have ended up in New York, San Francisco, or L.A.
$19.25
$17.81
$24.38
$21.01
Philadelphia, PA
$14.69
$13.41
$19.97
$18.14
Pittsburgh, PA
PHL
PIT
You've arrived at the end!
Keystone Trends
Pittsburgh’s latest reinvention, as a robotics and self-driving-car hot spot, hasn’t made office rents skyrocket. They are rising faster in its cross-state rival, Philadelphia, which, until very recently, had largely missed out on the big-city real estate boom.
