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Of the 173 markets surveyed, occupancy costs increased in 119 and decreased in only 24 in the last year. Much of the global rental growth can be seen in Asia, led by India and China, the world’s fastest growing major economies. With a 69% increase in occupation costs in the last 12 months, Mumbai’s (India) Nariman Point submarket has seen the greatest rent appreciation of the locations surveyed. While London’s West End, at $186/sq ft/annum, remains the most expensive office market in the world, North American markets including New York, Washington, D.C., Toronto and Calgary remain a relative bargain.
Central and Eastern Europe
Although occupancy costs in Central and Eastern Europe (CEE) have remained relatively stable since last August, there has been significant movement in other major world markets, especially in Asia, which pushed most of the CEE markets slightly lower in CB Richard Ellis’ May rankings. Bratislava, Budapest, Prague, Sofia and Warsaw all slipped slightly, whilst Bucharest and Moscow continued to climb the rankings. Moscow is the only CEE market to be listed in the top 50 most expensive office locations, where it retains its position as the sixth most expensive office location in the world at $94.76 (versus $85.29 last August). Bucharest’s office occupancy costs increased from $28.88 to $33.73, bringing the Romanian capital from the 78th to 63rd position in the rankings. The least expensive major CEE market in the survey is Sofia, where the prime occupancy cost is $22.17 placing it 122nd out of 173. The CEE markets continue to remain very competitive in Europe from an office occupancy point of view. For example, Warsaw, the most expensive office location in CEE after Moscow, is ranked 56th in the global rankings and is less expensive than 30 major Western European markets.
Europe
European cities continue to dominate the top 50 list of the most expensive office markets, led by London’s West End. Occupancy costs in that district—up 10% since last year—are 30% higher than the next most expensive submarket, Tokyo’s Inner Central. London City has seen occupancy costs rise to $127, a 7% increase in the last 12 months. Of the larger markets, Madrid witnessed the most significant rise in occupation costs, which increased 12% to $54.
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Asia Pacific
At $93 (occupancy cost in /sq ft/annum used throughout release), Mumbai ‘s Nariman Point broke into the top 10 most expensive markets. Elsewhere in Asia, Hong Kong occupancy costs jumped 50% to $102 over the last year.
Tokyo remains one of the world’s most expensive office markets. Occupancy costs in the Inner Central Five Wards, ranked 2nd, increased 8% to $130, while Outer Central costs, the 4th highest, increased 3% to $118. At $42 and ranked 43rd, Singapore returned to the top 50 after a three-year absence.
In the Pacific Region, Sydney remains the only market to make it into the top 50, coming in at 46th. But like the rest of the world, office occupancy costs are rising across most of the Pacific Region, albeit at very different rates.
Americas
Despite rental growth in many North American markets, only four—Midtown Manhattan, Washington, D.C., Toronto and Calgary—are in the current top 50. Washington, D.C., continues to benefit from a steady federal expansion, which is fueling a solid demand for space. Occupancy in Midtown Manhattan is still the most expensive in the United States at $55. Rio de Janeiro is at $51 and ranked 30th, while São Paulo, at $42 and ranked 42nd, returned to the top 50 after dropping off the list four years ago. |
