The cost to occupiers of taking space in the world’s best prime office buildings* rose 0.7% over the first quarter of 2026, according to Savills latest Prime Office Costs report, bringing total cost increases for occupiers to 5% over the last 12 months, and 9.1% over the last two years.
Savills says 23 of the 47 global cities it monitors saw net effective ‘all-in’ occupier costs (gross rent plus fit-out costs) increase in Q1. Regionally, costs in EMEA rose by 1%, in North America by 0.7%, and in Asia Pacific by 0.4%.
The international real estate advisor says that the biggest quarterly increases were recorded in Tokyo and New York’s Midtown, which saw costs rise 12.7% and 4.2% respectively in Q1. Both markets experienced considerable demand for a very limited pipeline of best-in-class space; leasing activity in Manhattan overall reached 12 million square feet in Q1 2026 for only the second time since 2021, says Savills, with two-thirds of these transactions occurring in Midtown.
Regional breakdown:
Asia Pacific saw the lowest regional increase in Q1 as it continues to be affected by a 2% decline in all-in costs across the four mainland Chinese hubs it monitors, although the rate of decline has begun to moderate over the last 12 months, says Savills. By contrast, across Asian markets excluding China, occupier costs rose by an average of 1.4%, driven primarily by rises in Tokyo, as noted above. Tokyo’s quarterly increase is the sharpest recorded in any of the APAC cities monitored since the report’s 2020 launch. That upwards pressure on occupier costs will continue in the near term.
EMEA recorded a steady 1% increase in net effective occupier costs, but Savills says this masks several notable shifts in individual markets. In Dublin, Q1 costs rose by 4.8% driven by increases in both rents and service charges, partly reflecting a slowdown in the new development pipelines. In Milan, costs increased by 3.5%, supported by rising rents and a slight reduction in rent abatements, largely due to strong tenant demand.
North America saw modest net occupier costs rises this quarter, averaging 0.7%. Midtown New York and San Francisco were exceptions, however, where costs increased 4.2% and 2.4%, respectively. Savills says that in San Francisco AI firms continue to drive a resurgence in prime office leasing and tightened availability in top-tier buildings, placing upwards pressure on prime rents. New York’s Midtown, meanwhile, has seen a clear shift in the drivers of cost growth in recent years, according to Savills. In the immediate post-pandemic period, landlords offered elevated incentives to attract occupiers and secure long-term leases. As demand has recovered, All-in costs have increased and incentives, especially rent-free periods, have now moderated to just above 2022 levels. Together, these factors have driven a 28.7% increase in net effective occupier costs in Midtown since Q1 2022.
Rick Schuham, CEO of Global Occupier Services at Savills, comments: “In the prime segment, occupier demand for the highest quality office space continues unabated in most major cities around the world. Midtown Manhattan is the obvious example, but in a large number of locations landlords have now reduced incentives and occupiers have limited options to choose from, making it imperative they engage with the market early, define their requirements effectively, and ensure their intentions and options are clear, to compel landlords to enter into a serious and expeditious negotiations.”
Sarah Brooks, Associate Director in Savills World Research, adds: “The key market trends of very limited supply and increasing rents have continued into 2026. This quarter we have added seven new cities to our analysis - Dallas, Atlanta, Mexico City, Manila, Lagos, Johannesburg and Oslo. These cities represent a mix of fast-growing and strategically important business locations with diverse pricing. While these are all very different markets, generally they are beginning to see increased demand for prime space, as global occupiers increasingly strategise to cost-effectively access the best talent ahead of their competitors.”
Read Savills Global Occupier Markets: Prime Office Costs – Q1 2026 in full here