Global occupier costs for prime office space rose by 3.4% year-on-year in the first half of 2025, according to international real estate advisor Savills. The increase reflects both higher gross rents and rising fit-out expenses as demand for premium office environments remains strong in leading global markets.

Savills’ latest Prime Office Costs report, covering 40 key cities worldwide, found that 24 markets experienced an increase in net effective costs in Q2 2025. These rises were primarily driven by a 0.9% quarterly increase in gross rents and a 0.8% rise in fit-out costs, highlighting the continued competition for best-in-class office space.

North America Leads Global Cost Growth

North America recorded the largest increase in occupier costs this quarter, with an average regional rise of 1.4 percent. No tracked markets in the region experienced declines, and only San Francisco, Los Angeles, and Chicago held steady. Miami stood out with a 3.4 percent surge in Q2, driven by high demand and the highest occupancy rates among major U.S. cities.

Asia Pacific: A Region of Contrasts

Costs across Asia Pacific remained flat overall, although market performance varied significantly. Mainland China saw a 2.5 percent drop in net effective costs as oversupply and weak business confidence weighed on the market. In contrast, Kuala Lumpur posted a 4.4 percent increase, fuelled by rising demand from multinationals and tech companies seeking higher-quality office space.

Europe and Middle East Register Modest Gains

Net effective occupier costs in Europe and the Middle East grew by 0.8 percent on average. Several cities outpaced this figure, including Prague, which led with a 3.1 percent rise. Paris and Milan also recorded increases above 2 percent. Limited new supply in these markets contributed to the upward trend.

Companies Expand as Preference for Premium Space Strengthens

The accompanying Market Makers report from Savills, which analyses the top 10 prime office leases in each market, shows that expansion remains a dominant trend. In the first half of 2025, 59 percent of large transactions involved companies taking more space. This is up from 54 percent in the second half of 2024. Only 8 percent of tracked deals involved downsizing.

Rick Schuham, CEO of Global Occupier Services at Savills, comments: “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, adds: “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.”