Global costs rise for prime office space

Global occupancy costs for prime office space rose by 3.4% year-on-year in the first half of 2025, according to Savills' latest Prime Office Costs report. The increase, driven by growth in both gross rents and fit-out costs, underscores the ongoing trend of businesses targeting high-quality office environments despite economic uncertainty.

Savills reports that of the 40 international markets it monitors, 24 experienced rising net effective occupier costs in the second quarter of 2025. This growth is attributed to sustained demand for best-in-class office space - referred to as "prime" in EMEA and APAC, and "trophy" in North America - offering modern amenities, central locations, and strong environmental credentials.

The data reflects a broader “flight to quality” among global occupiers, who are increasingly selecting high-specification space to support workforce expectations, align with environmental, social and governance (ESG) targets, and enhance brand positioning.

North America recorded the largest regional increase in Q2, with average occupier costs up 1.4%. No markets in the region saw a decline, and only San Francisco, Los Angeles, and Chicago remained flat. Miami stood out with a quarterly rise of 3.4% and posted the highest office occupancy levels among major U.S. cities.

Asia Pacific markets saw little overall change, though trends varied significantly by country. Costs in Mainland China declined by 2.5% as business confidence softened and supply remained high. In contrast, Kuala Lumpur experienced a 4.4% increase, driven by multinationals and technology firms upgrading to higher quality buildings.

Europe and the Middle East saw more modest growth of 0.8% in the quarter. However, key cities outpaced the regional average, with Paris, Milan, and Prague each reporting gains above 2%. Prague led with a 3.1% increase, attributed to a severe shortage of new prime space.

Savills’ accompanying Market Makers report, which tracks major office leasing transactions, indicates that firms are increasingly expanding their footprint. In the first half of 2025, 59% of top leasing deals involved tenants taking more space - up from 54% in the second half of 2024. Only 8% involved downsizing.

Rick Schuham, CEO of Global Occupier Services at Savills, noted that demand for premium space remains robust: “Net effective costs for prime office markets across the globe continue to grow while the number of businesses taking more space is also on the rise. Occupiers are targeting best-in-class buildings, as they prioritise premium office space to attract and retain talent, meet ESG commitments, and shape corporate brand.”

Sarah Brooks, Associate Director in Savills World Research team, highlighted the role of technology in this shift: “As the flight to prime continues, digital property management platforms, smart access and HVAC systems, and occupancy sensors and space utilisation tracking are now standard across many global markets.

Demand for technology which enhances the environmental ratings of buildings is also high, especially among tenants in Europe, as real estate is a critical lever for corporate emissions reduction.”

Savills defines prime office space as the top 5–10% of Grade A offices in a market. These spaces typically feature cutting-edge infrastructure, recent refurbishment, strong sustainability credentials, and central urban locations. The report’s cost analysis is based on actual transaction data for 20,000 sq ft of usable space across top-tier buildings, and includes rent, fit-out, and tenant incentives.