Prime Office Costs Continue to Rise Around the World, Says Savills

Why It Matters

Rising prime office costs tighten corporate budgets and shift market power back to landlords, reshaping real‑estate strategies globally.

Key Takeaways

• Global prime office costs rose 0.7% QoQ, 5% YoY
• Tokyo saw 12.7% quarterly jump, biggest since 2020
• Midtown Manhattan costs up 4.2% QoQ, 28.7% since 2022
• China hub costs fell 2% amid slowing market
• Savills adds seven new cities, reflecting broader demand

Pulse Analysis

The first‑quarter 2026 Savills Global Prime Office Cost Index shows net effective occupier costs climbing 0.7 percent quarter‑over‑quarter, pushing the annual gain to 5 percent and a two‑year rise of 9.1 percent. The uptick reflects a tightening supply of high‑quality workspace in major metros, where firms are willing to pay a premium for locations that attract talent and support collaboration. Across 47 cities, 23 recorded cost increases, underscoring a broad‑based recovery from the pandemic‑induced slowdown. As economies rebound, demand for premium office real estate is outpacing new development, creating upward pressure on rents and fit‑out expenses.

Tokyo posted the steepest quarterly surge, with occupier costs jumping 12.7 percent, the highest increase recorded in any Asia‑Pacific city since the index began in 2020. Midtown Manhattan followed with a 4.2 percent rise, contributing to a cumulative 28.7 percent cost escalation since Q1 2022, while San Francisco’s premium space grew 2.4 percent, driven largely by AI‑focused tenants. In contrast, the four Chinese hubs monitored fell 2 percent, though the decline is easing, highlighting divergent regional dynamics. Europe’s Dublin and Milan added 4.8 percent and 3.5 percent respectively, reflecting tighter rental markets and reduced landlord concessions.

The report’s expansion to include Dallas, Atlanta, Mexico City, Manila, Lagos, Johannesburg and Oslo signals that prime‑office demand is diffusing beyond traditional financial hubs. Companies seeking to secure top talent are increasingly willing to pay higher rents in secondary markets that offer strategic advantages and lower overall cost structures. For landlords, the shrinking pool of incentives forces a shift toward value‑added services and flexible lease terms to retain occupiers. Analysts expect the upward cost trajectory to persist through 2027 as corporate real‑estate strategies prioritize location quality over short‑term savings.