July 2, 2015— According to CBRE Research’s semi-annual Global Prime Office Occupancy Costs survey, Asia continued to dominate the world’s most expensive office locations, accounting for four of the top five markets. Beijing (Financial Street) and Beijing (CBD) both made the Top 10 list and ranked in 3rd and 4th place respectively.
London’s West End’s overall prime occupancy costs topped the ‘most expensive’ list at US$267 per sq. ft. per year. Hong Kong (Central) followed in second place at US$254 per sq. ft. per year, which is the only market in the world – other than London’s West End – with a prime occupancy cost exceeding US$200 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. It’s worth noting that Shanghai (Pudong) ended up taking the 11th spot at US$126 per sq. ft. per year. It was surpassed by New York and dropped out of the top 10 most expensive ranking for the first time.
The change in prime office occupancy costs mirrored the gradual recovery of the global economy. Overall global Grade A office occupancy costs rose 2% year-over-year, with Asia Pacific up 1.4%, reflecting the economic pressures that prevailed in the region over the past year.
“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 Sean Lim, executive director and head of office services, CBRE China. “At the same time, many office markets are increasingly short of new supply of well-designed, quality, modern 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.”
Frank Chen, Executive Director and Head of Research, CBRE China, commented: “in the Asia Pacific region, GDP growth is expected to reach 4.5% this year, slightly higher than 2014’s figure of 4.3%. The deceleration of China’s economy will be offset by policy easing and by improvements in India, Southeast Asia and Japan. The decline in oil prices is also expected to alleviate inflationary pressures facing Southeast Asian countries and India, creating conditions for future rate cuts and increased consumer spending. Throughout Asia Pacific, technology firms, business process outsourcing (BPO) firms and non-banking financial institutions are in expansionary mode, stimulating demand for office space. We also noticed that occupier activity in this region has been mixed, and in some markets less expansionary, with occupiers looking to improve space utilization, increase efficiency and optimize existing accommodations rather than expand.
CBRE tracks occupancy costs for prime office space in 127 markets around the globe. Of the top 50 ‘most expensive’ markets, Asia Pacific took the lead with 20 markets featured on the list.
1. The Global Prime Office Occupancy Costs report is a survey of office occupancy costs for prime office space in 127 cities worldwide.
2. The latest survey provides data on office rents and occupancy costs as of March 31, 2015.
3. The Largest Annual Changes rankings are based upon occupancy costs in local currency and measure. The Most Expensive ranking is based upon occupancy costs in US$ per sq. ft. per annum.
4. The figures given in this release refer to occupancy cost. This represents rent, plus local taxes and service charges. The occupation cost figures have also been adjusted to reflect different measurement practices from market to market.
5. Due to methodology changes, comparisons with figures in previously released reports are not valid.
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