June 20, 2017
Hong Kong and London’s West End again top global commercial property costs, according to CBRE 0
Hong Kong (Central) and London’s West End topped the list of prime commercial property occupancy costs again, according to CBRE Research’s latest annual Global Prime Office Occupancy Costs report. Hong Kong’s (Central) overall prime occupancy costs of US$303 per sq. ft. per year topped the “most expensive” list, followed by London’s West End (US$214 per sq. ft.), New York (Midtown) (US$203 per sq. ft.), Hong Kong (West Kowloon) (US$190 per sq. ft.) and Beijing (Central Business District (CBD)) (US$183 per sq. ft.). Global prime office occupancy costs—which reflect rent, plus local taxes and service charges for the highest-quality, “prime” office properties—rose 1.9 percent year-over-year, with the Americas up 3.6 percent, EMEA up 0.8 percent and Asia Pacific up 1.2 percent. Durban (South Africa) had the highest increase in occupancy cost overall, though Stockholm (Sweden) registered some of the fastest growth in Europe, along with Palma de Mallorca (Spain), Belfast (U.K.) and Amsterdam (Netherlands). In Asia Pacific, Shanghai (Puxi) in China had the highest growth in occupancy cost, followed by Guangzhou, Bangalore and Shanghai (Pudong). Buenos Aires showed the biggest increase in the Americas overall, while suburban Denver, suburban Houston and New York Midtown South saw the largest occupancy-cost increases in the U.S.
CBRE tracks occupancy costs for prime office space in 121 markets around the globe. Of the top 50 “most expensive” markets, 21 were in Asia Pacific, 16 were in EMEA and 13 were in the Americas.
In EMEA, Durban (South Africa) had the highest increase in occupancy cost overall, though Stockholm (Sweden) registered some of the fastest growth in Europe. Palma de Mallorca (Spain), Belfast (U.K.) and Amsterdam (Netherlands) also showed double-digit growth, with Lyon (France) and Berlin (Germany) not far behind.
In London’s West End, the fall in occupancy costs is largely due to a fall in rents triggered by more subdued demand, particularly amongst financial occupiers who have become less willing to pay the high rents prevailing in London’s premier market.
Occupier efforts to reduce occupancy costs due to the ongoing strength of the Swiss franc relative to the euro have resulted in falls in Swiss markets, including Geneva and Zurich.
London (City) was pushed out of the top-10 most expensive markets to 11th place, despite prime office costs rising by 2.9%.
In Asia Pacific, Shanghai (Puxi) in China had the highest growth in occupancy cost, followed by Guangzhou, Bangalore and Shanghai (Pudong).
In Singapore, occupancy costs continued to fall, thanks to increased supply of office stock and weak levels of inflation.
Asia Pacific was home to seven of the top 10 most expensive markets—Hong Kong (Central), Hong Kong (West Kowloon), Beijing (CBD), Beijing (Finance Street), Tokyo (Marunouchi/Otemachi), New Delhi (Connaught Place – CBD), and Shanghai (Pudong).
Hong Kong (Central) is the only market in the world with a prime occupancy cost exceeding US$300 per sq. ft.
The most expensive market in the global ranking from the Pacific Region was Sydney (US$97 per sq. ft.), in 19th place.
In the Americas, suburban Denver, suburban Houston and New York Midtown South saw the largest occupancy-cost increases in the U.S., but Buenos Aires showed the biggest increase in the Americas overall.
New York Midtown, number three on the global list, remained the most expensive market in the Americas, with a prime office occupancy cost of US$203 per sq. ft. New York Midtown South took the eighth spot on the list with a prime office occupancy cost of US$156 per sq. ft.
Sao Paulo was the most expensive market in Latin America, posting an office occupancy cost of US$69 per sq. ft. and ranking as the 35th most expensive market globally.
