Our analysis of the top 10 prime office occupier deals by size across global cities shows that expansions and renewals still dominate activity, in spite of rising costs and broader economic uncertainty. Tech remained the top industry by deal volume, followed by finance.
Market Makers highlights the top 10 largest public transactions by size in each of our 35 global Prime Office Cost markets. A diverse range of industries are transacting in both domestic and global markets, with an emphasis on quality space – in spite of rising costs and broader economic uncertainty. Only 6% of these deals in the first half of 2024 involve businesses shrinking their office footprint, while 94% chose to either expand or renew their current sizing.
As explored in Global Occupier Markets: Prime Office Costs, net effective office costs to occupiers are rising globally as a result of higher rents, fit-out costs, and in some markets fewer landlord concessions. This highlights the continued flight to prime and the resilience of top-tier office leasing markets, as many businesses continue to invest in their office space, core to their business operations.
Despite persistent discussions about rightsizing, expansion made up 39% of all deals, consistent with the 40% share last quarter, and only 6% of businesses consolidated their office space among these top deals. Simple renewals are up over our last biannual report, from 16% last half year to 24% currently, which may reflect concerns about higher borrowing and fit-out costs.
Finance, legal, and professional services firms remain office-using heavyweights, accounting for 33% of leasing in the first half of 2024, based on our sample. However, tech remains the number one industry for deals overall at 19% of the total, boasting both the largest number of new set-ups (partly driven by growing AI firms) and expansion & relocation deals. This is despite many larger, well-known tech firms reevaluating their real estate strategies.
One other industry of note are flexible office space providers, particularly in APAC, where there has been a significant uptake in leasing volume. In this region, flexible space is a popular choice for start-ups where hybrid working is more entrenched in these small businesses, contributing to the growth in leasing volumes.
While tech leads the total volume of transactions of any industry, it accounts for no more than five of the top 10 biggest transactions across any of our markets. The tech industry has the third largest average transaction sizes at an average of 96,500 square feet, behind Media and Government sectors. The most active region for these tech transactions is the western United States, with traditional tech hubs such as San Francisco and Seattle leading the way. In India, an emerging tech market has seen fewer overall tech-related transactions, there has been a larger average deal size, with 157,000 square feet per transaction versus 140,000 square feet in the western United States. This growth in the tech sector in India comes from both large domestic firms as well as international cross border companies expanding into the Indian market.