London’s West End Office Market Ranks First in CBRE’s Occupancy Costs Study
- Jun 26, 2014
London—The title of world’s highest-priced office market is staying in the capital of the United Kingdom, while three of the top five markets are located in Asia, confirming the area’s recent rise to power in terms of office space, the latest CBRE Global Research and Consulting survey shows.
London’s West End maintained its title as the most expensive office market with overall occupancy costs in the submarket hitting $277 per square foot per year. According to CBRE, that rate outpaces Central Hong Kong, whose rate stands at $241, as well as Beijing’s Finance Street and CBD submarkets, both of which are still a far cry from the top two, specifically at $194 and $187, respectively. Other prominent markets that are featured in the top 10 provided in the Global Prime Office Occupancy Costs survey are Moscow at $165 per square foot per year, New Delhi at $153, Tokyo at $145 and Paris at $124.
CBRE’s data comes from tracking occupancy costs in the prime office sector in 126 markets. According to the report, the 50 hottest markets are located in EMEA (21), Asia Pacific (20) and the Americas (9).
EMEA is the home of the top office market in the world in terms of occupancy costs, with London’s West End market seeing restrictions in the amount of new development coming to the area. This has led to the tightening of the market and low vacancy rates, which along with the UK’s slight economic improvement, have driven the West End office market to new highs, with serious pressure being exerted on rent rates in 2013 and 2014. The Moscow and Paris office markets are also in the top ten in terms of rates per square foot per year, with the low points being recorded by Palma de Mallorca, Spain, and Lyon, France, both of which have seen decreases in prime occupancy costs of more than 10 percent over the past 12 months.
Asia Pacific is the strongest area, although it has fewer top 50 markets than the EMEA region. Three of the top four and six of the top 10 most expensive office markets in the world are located here. Hong Kong (Central) is the only office market apart from London West End that has managed to have occupancy costs exceeding $200 per square foot per year. One of Hong Kong’s submarkets, namely West Kowloon, has dropped one position down to sixth overall due to a decrease in occupancy costs of approximately 8 percent. The small amount of available space is currently preventing larger entities from relocating to the office market, and leasing activity has diminished during the past year. The Pacific Region’s most expensive market is Sydney, with $106 per square foot per year, coming in 17th overall.