A $75 million office-hotel project at 28th Street and Camelback Road known as Camelback Collective is currently under construction within the Camelback Corridor submarket. (Photo courtesy of Camelback Collective)
Camelback Road among the most expensive streets in America
Just how much will companies pay to occupy one of America’s most desired office addresses? According to JLL’s 2017 Most Expensive Streets study, which looks at priciest U.S. office space, those high-profile strips command an average asking rent of $48.65 per-square-foot, a 46.9 percent premium compared to the rest of the country. In Phoenix, Camelback Road (within the Camelback Corridor submarket) commands an average asking rent of $36.65 per-square-foot, a 44.9 percent premium compared with the rest of the market.
Location, location, location
While traditional drivers like the financial, real estate and consulting industries continue to make their presence felt on popular streets throughout the U.S., tech is having an outsized effect. In fact, five of the top 10 streets in the national ranking are tech hubs.
In Phoenix, Camelback Road and the Camelback Corridor has only recently started to attract tech companies, such as Zenreach and flexible office space operator Workuity, both of which have established a home in the Biltmore Center. But, it is the quality Class A office space and growing area amenities that seem to continue to attract traditional companies to the Camelback Corridor. And these qualities continue to attract investors too.
“This area is the most prestigious office submarket in Phoenix and where institutional owners invest,” said JLL Senior Managing Director Dennis Desmond. “Investors have spent more than $962 million to acquire 4.1 million square feet of prime Corridor office product in the past 36 months.”
The tech effect on other roads
Tech companies may not be making a huge impact on Camelback Road, but they are making impacts in other submarkets throughout Phoenix. The next top four most expensive streets in the Valley after Camelback Road are:
- North Scottsdale Road (in Scottsdale Airpark), with an average asking rent of $34.50 per-square-foot.
- Central Avenue (in downtown Phoenix), with an average asking rent of $32.94 per-square-foot.
- South Scottsdale Road (near Old Town and Skysong), with an average asking rent of $31.48 per-square-foot.
- Rio Salado Parkway (around and through downtown Tempe), with an average asking rent of $30.49-per-square-foot.
Each of these streets is attracting technology companies en masse as office users seek easy access to the millennial workforce and therefore want to be in the live, work, play environments that millennials desire.
“As tech companies continue to move to Phoenix from the larger tech hubs, even the highest asking rates in our market don’t seem so expensive from the outside looking in,” said JLL Senior Research Analyst Kiana Cox. “Compared to markets like San Francisco, where some owners are achieving rents north of $150 per-square-foot, tech tenants in Phoenix are only paying $37 to $45 per-square-foot for the best space available in our market. Affordability is important, of course, but there is a bigger emphasis on location when it comes to recruiting, retention and culture.”
Most Expensive Streets in the U.S.
1.) Sand Hill Road, San Francisco: Home to some of the most prominent venture capital firms, Sand Hill Road is one of the Bay Area’s most high-profile business addresses. Rents here average $119.38 per-square-foot, and have hit as high as $185 per-square-foot.
2.) Fifth Avenue, New York: Popular among hedge funds, investment banks and law firms, Fifth Avenue remains a New York landmark and one of the country’s most glamorous addresses. Average rents achieved $116.04 per-square-foot, with top rents of $185 per-square-foot coming at a 157.9 percent premium compared to the rest of the market, helping propel Fifth Avenue up one place from the previous report.
3.) Mission Street, San Francisco: Mission Street is home to a unique blend of prominent tech and financial services tenants, making it one of the best-recognized addresses in San Francisco. With an average asking rent of $93.68 per-square-foot, Mission Street boosted its ranking by two spots since 2015.
4.) Main Street, Boston: Main Street is at the heart of Kendall Square in Cambridge and a hub for the top life sciences and tech companies globally. An address here comes with average rents of $90 per-square-foot, a list-topping 143.6 percent premium compared to Boston at large. Vacancy is also in the mid-single digits at a miniscule 5.3 percent.
5.) Greenwich Avenue, Fairfield County: Housing a variety of hedge funds and financial services companies, Greenwich Avenue is also lined with upscale retailers and restaurants. Rents average $86.53 per-square-foot, with top rents coming in at $101 per-square-foot, a whopping 177.4 percent premium compared to the rest of Fairfield County.
6.) Pennsylvania Avenue, Washington, DC: Pennsylvania Avenue not only serves as the address of the White House, it is also home to a variety of prestigious law firms and lobbying organizations and offers some of the best views in Washington, DC. At $80 per-square-foot, sharing a street with the White House and the Capitol means paying a 95.1 percent premium compared to the rest of the market. The street maintained its ranking from 2015.
7.) Ocean Avenue, Los Angeles: Ocean Avenue runs north to south along the Pacific Coast, offering stunning ocean views and easy access to the beach. But gaining access to the famed strip, where rents average $78.20 per-square-foot, is anything but easy: vacancy is just 7.1 percent.
8.) Boylston Street, Boston: Boylston Street is the premier office market in Boston’s CBD. The area attracts primarily financial and legal services firms. At $68.87 per-square-foot, Boylston Street was supplanted from its previous ranking at number seven.
9.) Royal Palm Way, West Palm Beach: With a concentration of high-net worth individuals living in the surrounding areas, Royal Palm Way is home to many financial institutions and wealth management companies. Staying put in the ninth spot on the list, Royal Palm Way averages $61.80 per-square-foot, a 96.1 percent premium compared to the rest of West Palm Beach.
10.) Congress Avenue, Austin: Traditionally home to financial and state-government users, a wave of new office, multifamily and retail developments has transformed Congress Avenue into one of the market’s most dynamic corridors. A newcomer to the list’s top 10, Congress Avenue averages $55.20 per-square-foot and boasts a tiny 9.5 percent vacancy.