Updated – Analysis of Top 1,000 US Leaseholders Representing $135 Billion in Rent Value Confirms Rapid Ascent and Influence of Tech Tenants, Importance of Govt. Occupiers to CRE Landlords
The study ranks occupiers by the current value of rents paid across their U.S. real estate portfolios in CoStar’s database. Total rent value was calculated by multiplying the space occupied by tenants in each building by the estimated rent value per property in the U.S. and providing a total lease value for each occupier across markets.
Of the top 1,000, Amazon.com had the highest overall rent value relative to its occupied square footage, with a total $1.34 billion in rent value across 352 U.S. properties totaling more than 130 million square feet of industrial, office and flex space. Amazon controls large blocks of office space in Manhattan, San Francisco and its headquarters city of Seattle, among other markets.
The high dollar value of the internet retailer’s lease obligations can be attributed to its robust absorption of office space in recent years, along with its growing network of hundreds of fulfillment, customer service and other distribution facilities. For purposes of the study, which did not include retail properties, Amazon has also broadened its property footprint with the non-grocery assets in its June acquisition of Austin-based Whole Foods Market, Inc. Amazon occupancy is sure to grow even larger in coming years with the anticipated announcement of the site for its proposed $5 billion HQ2 corporate headquarters campus, which will have capacity for 50,000 employees and 8 million square feet.
The internet seller’s request for proposals (RFP) announcement set off arguably the largest economic development and business attraction scramble in modern corporate history last summer, with Amazon revealing that it received proposals from 238 cities and regions across 54 states, provinces, and local or regional jurisdictions throughout North America. Rumors are swirling that Amazon will soon announce the short list of contenders or even the winning city.
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The study was directed by CoStar Senior Research Director Corey Durant, Senior Vice President of Technology Jason Butler and Senior VP of Global Research Lisa Ruggles. CoStar’s analytics team contributed data on the estimated rent value per property for U.S. office, industrial and flex properties.
Durant said the results were eye opening and in some cases, surprising.
“The number of banks and tech companies among the largest rent payers was revealing,” Durant said. “Who would have thought the Dept. of Justice would have the fourth-highest rent value among the 1,000 largest tenants? Amazon, Apple, Google and Microsoft were all near the top as one might expect. However, DaVita Healthcare, with its network of dialysis treatment centers stood out as a definite riser at #21,” Durant added.
Other significant findings in the study included the high rent value contributed by federal government agencies and other state, local and regional jurisdictions. Of the top 25 occupiers in total rent value, the U.S. Dept. of Justice ranked just behind Wells Fargo at #4, representing total rent value of $822 million in more than 850 facilities totaling 24.5 million square feet.
After Amazon, the #2 and #3 spots are held by two of the nation’s largest banks, Bank of America and Wells Fargo. Other financial institutions in the top 25 include JPMorgan Chase, Morgan Stanley, Citigroup and the U.S. Treasury Dept., which occupies nearly 300 properties for a total of nearly 13.5 million square feet with a rent value of about $347 million, ranking #22 among the top 1,000 occupiers.
State Farm Insurance had the largest number of properties among the top 1,000 occupiers, 9,654 properties totaling 25.6 million square feet, and total rent value of just under $500 million, ranking #10 in the top 1,000 with rent value of about $498.6 million.
Tech companies were strongly represented among the rent value leaders, with their offices and other facilities concentrated in the priciest submarkets of top gateway metros with the nation’s highest average office rental rates such as Manhattan, San Francisco, Silicon Valley, Boston, Los Angeles and Seattle.
Alphabet, Inc., the multinational conglomerate formed in a 2015 corporate restructuring of Mountain View, CA-based Google and the world’s second-largest internet company by revenue behind Amazon, ranked #8 in rent value with its nearly 12.5 million square feet of occupied space. Other tech companies with fast-growing footprints such as Microsoft and Apple were also in the top 25.
Other data points of note in the survey included the following:
Editor’s note: This update conforms several of the rankings in the text of the article with the correct rankings in the chart above.