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10 Most Expensive States to Lease Commercial Real Estate

Published: 05-13-22 Category: Leasing/Renting

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

The cost of leasing commercial real estate varies across the country.

Since leasing costs can have a big impact on a business’s bottom line, it’s important to understand which locations provide the best value for your company.

To make informed decisions about where your business should lease office space, warehouse storage, or another type of commercial property, you need to understand how the market in your state compares with others around the country.

Here is a list of the 10 most expensive states to lease commercial real estate in the United States.

#10 – Maryland

Commercial real estate in Maryland’s major metro areas, such as Baltimore, is more expensive than the state average.

The average cost of office rent per square foot in Maryland in 2020 was:

Class A Office Space: $32.41 per square foot;
Class B Office Space: $25.12 per square foot;
Class C Office Space: $19.46 per square foot.

The high cost of leasing commercial real estate in Maryland is driven in part by the state’s high cost of living. Maryland’s goods and services are more expensive than average, with higher than average costs for goods like gasoline and groceries.

#9 – Colorado

Colorado’s commercial real estate is more expensive than most. It has a strong economy, with many high-paying jobs in aerospace and tourism.

The average cost of office rent per square foot in Colorado in 2020 was:

Class A Office Space: $33.93 per square foot;
Class B Office Space: $24.71 per square foot;
Class C Office Space: $17.89 per square foot.

The high cost of leasing commercial real estate in Colorado is driven by the high level of demand.

#8 – Alaska

Commercial real estate in Alaska is expensive, in part, due to its harsh climate and difficulty in transporting raw materials to its remote location.

The average cost of office rent per square foot in Alaska in 2020 was:

Class A Office Space: $34.33 per square foot;
Class B Office Space: $28.77 per square foot.

The economy in Alaska is unique. Certain times of the year might be less expensive to lease commercial real estate.

#7 – Texas

Commercial real estate in Texas’s major metro areas is more expensive than the state average. However, it is quite expensive to lease commercial real estate in Dallas, Austin, and San Antonio.

The average cost of office rent per square foot in Texas in 2020 was:

Class A Office Space: $35.41 per square foot;
Class B Office Space: $23.36 per square foot;
Class C Office Space: $16.89 per square foot.

Texas is a huge state. Some areas of Texas are growing, while others have plenty of inventory available. The costs vary based on where you look in the state.

#6 – Connecticut

Commercial real estate in Connecticut’s major metro areas is more expensive than average.

The average cost of office rent per square foot in Connecticut in 2020 was:

Class A Office Space: $35.83 per square foot;
Class B Office Space: $23.70 per square foot;
Class C Office Space: $18.29 per square foot.

The high cost of leasing commercial real estate in Connecticut’s major metro areas is also driven by high demand, with many firms competing for relatively few properties in New Haven and Hartford.

#5 – Virginia

Virginia’s commercial real estate market is more expensive than average. Virginia has a very strong economy, with many high-paying jobs in the government sector.

The average cost of office rent per square foot in Virginia in 2020 was:

Class A Office Space: $35.90 per square foot;
Class B Office Space: $25.14 per square foot;
Class C Office Space: $20.93 per square foot.

The high cost of leasing commercial real estate in Virginia is also driven in part by the state’s high cost of living.

#4 – Hawaii

Hawaii’s commercial real estate is more expensive than average.

The average cost of office rent per square foot in Hawaii in 2020 was:

Class A Office Space: $42.51 per square foot;
Class B Office Space: $34.55 per square foot.

The high cost of leasing commercial real estate in Honolulu is also driven by high demand.

Honolulu’s commercial real estate market is one of the most desirable in the country, especially for businesses in hospitality, food service, and leisure.

#3 – California

California is a huge state with diverse regional and local economic conditions. Its most expensive metro areas are not only much more expensive than the state average but also cost more than most other states.

Overall, the state has a high cost of doing business due in part to government regulations and fees, and a high cost of labor.

The average cost of office rent per square foot in California in 2020 was:

Class A Office Space: $55.92 per square foot;
Class B Office Space: $35.12 per square foot;
Class C Office Space: $23.50 per square foot.

Leasing in California’s major metro areas is even more expensive. Although California’s large cities are expensive overall, some of the state’s smaller metro areas are a better value.

#2 – Washington D.C.

Washington D.C.’s commercial real estate is more expensive than average, particularly in its downtown area. The high cost of doing business in Washington D.C. is driven in part by government spending and tourism.

The average cost of office rent per square foot in Washington D.C. in 2020 was:

Class A Office Space: $60.82 per square foot;
Class B Office Space: $48.15 per square foot;
Class C Office Space: $31.94 per square foot.

Washington D.C.’s commercial real estate market is one of the most robust in the country, with many firms competing for relatively few properties.

#1 – New York

New York’s commercial real estate market is among the most expensive in the country. Its high costs are driven in large part by high demand, as well as the high cost of living in the state.

New York’s total employment is relatively high, and many of the jobs are in industries with high wages.

The average cost of office rent per square foot in New York in 2020 was:

Class A Office Space: $68.40 per square foot;
Class B Office Space: $34.41 per square foot;
Class C Office Space: $25.31 per square foot.

New York’s two largest metro areas, New York City and the Long Island region, are even pricier. New York City’s commercial real estate is the most expensive in the country.

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