June 14, 2019
Continued economic growth, job gains and limited availability of prime space in certain markets caused an acceleration in global prime office space occupancy costs in the year ended March 31. New research by Los Angeles-based CBRE shows that of the 122 markets it tracks, 85 registered cost increases.
CBRE’s annual Global Prime Office Occupancy Costs report found that average costs for leasing the best office space in each market’s best location increased by 3.6% globally in that 12-month period, outpacing the year-earlier gain of 2.4%.
The 10 most expensive markets were the same as last year, though several have changed positions within the top category. Hong Kong Central, at $322-per-square-foot per-year, and London’s West End ($222.70) retained the top two spots, with the former widening the gap between itself and the field.
The biggest gainer within the top 10 was New York City’s Midtown Manhattan, which rose to $196.89. It climbed to the fourth most expensive market this year from the sixth last year, as companies sought prime space in Midtown corridors and the new Hudson Yards mixed-use development.
CBRE’s Julie Whelan says, “The race to attract and retain talent by securing office environments of the highest quality lost no momentum, despite slower economies in some regions and unpredictable trade discussions. In fact, the cost of occupying prime office space rose at a steeper rate, as supply remained constrained in some coveted markets. Demand is notably strong from banking, finance, technology and co-working companies.”
10 Most Expensive Markets (In US$ per sq. ft. per year; as of Q1 2019)
|Market||Occupancy Cost||Market||Occupancy Cost|
|1 Hong Kong (Central), Hong Kong||$322.00||6 Beijing (CBD), China||$177.05|
|2 London (West End), U.K.||$222.70||7 New York (Midtown-South Manhattan), U.S.||$169.86|
|3 Hong Kong (Kowloon), Hong Kong||$208.67||8 Tokyo (Marunouchi/Otemachi), Japan||$167.82|
|4 New York (Midtown Manhattan), U.S.||$196.89||9 New Delhi (Connaught Place – CBD), India||$143.97|
|5 Beijing (Finance Street), China||$187.77||10 London (City), U.K.||$139.75|
Top 10 Annual Market Increases (In local currency and measure; as of Q1 2019)
|Market||Percentage Increase||Market||Percentage Increase|
|1 Porto, Portugal||24.7%||6 Atlanta (Buckhead & Midtown), U.S.||14.2%|
|2 Cape Town, South Africa||20.5%||7 Vancouver (Downtown), Canada||12.9%|
|3 Singapore, Singapore||17.3%||8 San Francisco (Peninsula), U.S.||12.7%|
|4 Budapest, Hungary||15.5%||9 San Francisco (Downtown), U.S.||12.2%|
|5 Palma de Mallorca, Spain||14.2%||10 Johannesburg, South Africa||12.0%|
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