Global prime office costs rose 0.8% in the third quarter of 2025, bringing the annual increase to 3.3%. Of the 40 major markets tracked, 25 saw occupier costs grow as rising rents outpaced steady fit-out prices, according to Savills.
While construction and labor expenses held mostly flat, landlords are gaining ground as tight supply and renewed tenant demand drive rental increases.
Asia Pacific: A Region of Contrasts
Average prime office costs across Asia Pacific rose 1% in Q3, but regional trends vary sharply. Oversupply and fragile economic confidence pushed costs in Chinese cities down nearly 2%, while Kuala Lumpur saw a 6.5% rise — its second strong quarter in a row — as global tech firms competed for limited high-end offices.
North America: Demand From AI Firms Offsets Vacancy in Canada
After a 1.4% rise in Q2, North American cities posted a 0.6% increase in Q3. San Francisco led with a 1.5% uptick, fueled by AI-driven demand for top space.
In contrast, Toronto’s prime costs fell 2% amid higher vacancies and sublease options, giving occupiers room to upgrade at better terms.
Europe and the Middle East: Growth Without Declines
No markets in Europe or the Middle East saw declines this quarter. Overall costs rose 0.9%, with Frankfurt up 3.6% due to a shortage of large, high-quality floorplates.
In the Middle East, strong competition for best-in-class offices pushed costs up 2.1% in Dubai, 2% in Riyadh, and 1.6% in Cairo.
Limited Supply Keeps Prices Firm
Fit-out prices have stabilized after several years of inflation, but rent growth is accelerating again as occupiers seek quality space in undersupplied markets. With prime availability tight across major hubs, landlords are holding the advantage, and costs are likely to stay elevated through year-end.
