January 07, 2015, Hong Kong – Hong Kong ranked amongst the world’s highest-priced office markets, just after London’s West End, according to CBRE Research’s latest Global Prime Office Occupancy Costs survey. Central District, in Hong Kong, remained the only market in the world—other than London’s West End—with a prime occupancy cost exceeding US$200 per sq. ft.
London West End’s overall prime occupancy costs of US$274 per sq. ft., per year topped the list, followed by Hong Kong’s Central District with total prime occupancy costs of US$251 per sq. ft. Beijing (Finance Street) was third at US$198 per sq. ft., Beijing (Central Business District (CBD)) at US$189 per sq. ft., and Moscow (US$165 per sq. ft.) rounded out the top five. New Delhi (Connaught Place CBD), Hong Kong (West Kowloon), Tokyo (Marunouchi Otemachi), and Shanghai (Pudong) also features in the top ten ranking.
Asia continued to lead the world’s most expensive office locations, accounting for seven of the top ten markets.
Source: CBRE Global Research and Consulting, Q3 2014.
“The commercial leasing market remained largely stable in Central in 2014, supported by Mainland Chinese tenants willing to pay premium rents for smaller units, in high profile buildings,” said Rhodri James, Executive Director, CBRE Office Services, Hong Kong. ”Whilst many sectors remained quiet throughout the year, the launch of the Shanghai-Hong Kong Stock Connect is expected to increase leasing demand in 2015, particularly in the financial sector. Rents are due to remain broadly stable however there is the potential for more substantial increases in the prime Central buildings.”
The change in prime office occupancy costs mirrored the gradual, multi-speed recovery of the global economy. Global prime office occupancy costs rose 2.5% year-over-year, led by the Americas (up 4.1%) and Asia Pacific (up 2.8%).
“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 Richard Barkham, Global Chief Economist, CBRE. “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.”
CBRE tracks occupancy costs for prime office space in 126 markets around the globe. Of the top 50 most expensive markets, 20 were in Asia Pacific, 20 were in EMEA, and 10 were in the Americas.
Asia Pacific had 20 markets ranked in the top 50 most expensive, including the seven in the top ten. Occupier activity in this region was largely driven by domestic corporations and companies in the technology, media and telecommunications sectors. Half the markets saw costs increase above 1%.
The most expensive market in the global ranking from the Pacific Region was Sydney at US$99 per sq. ft., in 19th place.
1.The Global Prime Office Occupancy Costs report is a survey of office occupancy costs for prime office space in 126 cities worldwide.
2.The latest survey provides data on office rents and occupancy costs as of September 30, 2014.
3.The Most Expensive ranking is based upon occupancy costs in US$ per sq. ft. per annum.
4.The figures given in this release refer to occupancy cost. This represents rent, plus local taxes and service charges. The occupation cost figures have also been adjusted to reflect different measurement practices from market to market.
5.Due to methodology changes, comparisons with figures in previously released reports are not valid.