Study finds
Hong Kong Central remained the most expensive office market in the world with London’s West End taking second place, according to CBRE’s annual Global Prime Office Occupancy Costs report.
Nine of the top-10 most expensive locations are the same as last year, but London (City) returned after a brief hiatus, with overall prime occupancy costs at US$145 per sq. ft, displacing Shanghai (Pudong) for the 10th spot. Meanwhile London’s West End reached prime occupancy costs of US$235 per sq. ft.
Kevin McCauley, Head of London research at CBRE said: “Helped by sterling’s appreciation against the U.S. dollar, the return of London (City) to the ranking reflects robust and diversified tenant demand and relatively limited new supply. London’s attraction to both UK and international businesses means that it will continue to command some of the highest office costs in the world.”
Hong Kong Central’s overall prime occupancy costs of US$307 per sq. ft. per year topped the “most expensive” list, followed by London West End (US$235 per sq. ft.), Beijing Finance Street (US$201 per sq. ft.), Hong Kong Kowloon (US$190 per sq. ft.) and Beijing Central Business District (US$189 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 2.4 percent year-over-year, with the Americas up 3.2 percent, EMEA up 2 percent and Asia Pacific up 1.7 percent.
“For the first time in this cycle, prime office occupancy cost growth was consistent across all regions,” said Richard Barkham, global chief economist, CBRE. “Global economic growth has stimulated robust leasing activity, particularly in EMEA and APAC. While occupancy cost growth in the Americas slowed slightly compared to a year earlier, it remains the region with the overall largest increase in costs. We expect global office occupancy costs to increase by approximately 2 percent in the year ahead.”