CBRE Research’s semi-annual ‘Global Prime Office Occupancy Costs’ survey report reveals London’s West End to be the world’s most expensive office market, with cities in Asia occupying three of the top five spots.
The survey shows London’s West End to have overall prime occupancy costs of US$274 per sq ft per annum (US$2949.33 a sqm), followed by Hong Kong’s Central district (US$251 per sq ft or US$2701.76 a sqm), Beijing’s Finance Street (US$198 per sq ft or US$2131.27 a sqm), Beijing’s CBD (US$189 per sq ft/US$2034.39 a sqm) and Moscow (US$165 per sq ft/US$1776.06 a sqm).
Of the Australian cities to make the top 50, Sydney ranks 19th on the list, with prime occupancy costs of US$99 per sq ft (US$1065.63 a sqm) per year. The only others to make the list are Perth in 31st place (prime occupancy costs of US$77 per sq ft/US$828.82 a sqm) and Brisbane in 46th place (US$67 per sq ft/US$721.18 a sqm).
The survey shows that prime rents have increased rapidly in the Americas, with five of the 10 markets with the fastest-growing prime occupancy costs located in the US. Seattle (Suburban), San Francisco (Peninsula), Boston (Suburban), San Francisco (Downtown) and Seattle (Downtown) all made the top 10.
The strong recovery of the Dublin office market was responsible for it posting the largest annual change in occupancy costs of any city, with an increase of 35 per cent recorded.
CBRE urges caution when making direct comparisons with figures in previously released reports, due to changes in methodology. Nevertheless, the report surmises that recent changes in prime office occupancy costs have mirrored the gradual, multi-speed recovery of the global economy. Global prime office occupancy costs rose 2.5 per cent year-over-year, led by the Americas (up 4.1 per cent) and Asia-Pacific (up 2.8 per cent). Europe, the Middle East and Africa, when taken as a bloc, experienced just 0.3 per cent growth year-over-year.
“We expect the gradual recovery of the global economy to continue, leading to better hiring rates and further reduction in the availability of space across most markets over the near term,” said CBRE’s global chief economist, Richard Barkham.
“In this environment we expect occupancy costs to continue rising from current levels, further limiting options for occupiers. Technology, quality and flexibility are expected to increasingly come into consideration in space use and location decisions, as occupiers will seek to contain costs and improve productivity.”
The ‘Global Prime Office Occupancy Costs’ report is a survey of office occupancy costs for prime office space in 126 cities worldwide. The latest survey provides data on office rents and occupancy costs as at 30 September 2014.