London’s West End offices are once again the highest-priced in the world market.
According to CBRE Global Research and Consulting’s semi-annual Global Prime Office Occupancy Costs survey London’s West End’s overall occupancy costs were US$259.36 per sq. ft., followed by Hong Kong-Central with total occupancy costs of US$234.30. Beijing’s Finance Street, Beijing’s Central Business District (CBD) and Hong Kong’s West Kowloon rounded out the top five.
18 Grosvenor Street office building in Mayfair, London W1
Development restrictions in core areas of London have contributed to the West End’s low vacancy rate and placed upward pressure on occupancy costs–which rose 14.3%. At the same time demand is rising from financial firms, such as hedge fund managers, which were more willing to pay a premium for prime office space in the most prestigious areas.
New office development Marble Arch House on Edgware Road, London W1
Globally, occupancy costs rose 2.2% for the 12 months ending Q3 2013, up from the 1.4% annual growth rate seen at the end of Q1 2013. All three of the world’s regions saw annual growth, led by the Americas, at 4.6%, followed by Asia Pacific, at 3.2%, and EMEA, at 0.4%. This performance reflects the relative strength of the recovery across global regions.
“The growth of occupancy costs for prime office space in the past year underscores that even in a slowly recovering economy, demand for the best space in the best locations continues to be strong,” said Dr. Raymond Torto, Global Chairman, CBRE Research.
CBRE tracks occupancy costs for prime office space in 126 markets around the globe. Of the top 50 “most expensive” markets, 20 are in Asia Pacific, 19 are in EMEA and 11 are in the Americas.
Occupancy cost comparisons in U.S. dollars are affected by currency exchange rates. However, the annual percent change in occupancy costs are in local currency and are not influenced by currency changes (except Jakarta, Indonesia where leases are typically written in U.S. dollars, but paid in rupiah, which means the occupancy cost increase is greatly affected by the currency depreciation in Indonesia).
Read the full story at CBRE.