London named world’s most expensive office market
ACCORDING to CBRE Research’s semi-annual Global Prime Office Occupancy Costs survey, London’s West End continued to be the world’s highest-priced office market but Asia dominated the world’s most expensive office locations, accounting for four of the top five markets.
The study also found that the real estate recovery in the Emerald Isle (Ireland) remained on track, with Dublin (26.1 percent) and Belfast (13.3 percent) showing the largest and fourth-largest year-over-year prime occupancy cost increases, respectively among the 127 cities surveyed. In North America real estate fundamentals remained strong with Seattle (Downtown), San Francisco (Peninsula) and Vancouver (Suburban) among the 10 markets with the fastest growing prime occupancy costs.
London West End’s overall prime occupancy costs of US$267 per sq. ft. per year topped the “most expensive” list. Hong Kong (Central) followed with total prime occupancy costs of US$254 per sq. ft., Beijing (Finance Street) (US$196 per sq. ft.), Beijing (Central Business District (CBD) (US$188 per sq. ft.) and New Delhi (Connaught Place – CBD) (US$157 per sq. ft.) rounded out the top five.
The change in prime office occupancy costs mirrored the gradual recovery of the global economy. Global prime office occupancy costs rose 2.0 percent year-over-year, with the Americas up 2.9 percent, EMEA rising 1.5 percent and Asia Pacific up 1.4 percent.
“Occupier caution has declined and corporate confidence has been on the rise and this confidence is starting to translate into a degree of expansionary momentum, “said Richard Barkham , Global Chief Economist, CBRE. “At the same time, many office markets are increasingly short of the quality, modern, flexible and highly accessible or CBD-located office buildings which corporations are seeking to execute workplace strategies that will drive productivity and attract or retain talent.”
CBRE tracks occupancy costs for prime office space in 127 markets around the globe. Of the top 50 “most expensive” markets, 19 were in EMEA, 20 were in Asia Pacific and 11 were in the Americas.
Europe Middle East & Africa (EMEA)
The continued recovery has led to a revival in leasing activity beyond London and Dublin to UK regional cities and smaller Central and Eastern European markets. The exceptions have been Russian office markets, where Western sanctions and the steep drop in oil prices have led to a deep recession, and Warsaw, where supply levels continue to exert downward pressure on rents. In EMEA, occupiers are starting to switch from cost optimization and space reduction to expansions. Prime office occupancy costs increased by 1.5 percent, as only 11 out of 57 EMEA markets saw a year-over-year decline in occupancy costs.
In addition to London West End, other markets from the region on the global top 10 list are London City (US$143 per sq. ft.) and Moscow (US$128 per sq. ft.).