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London Remains World's Most Expensive Office Market

Press Releases   •   Dec 17, 2014 09:00 GMT

Three of Five Priciest Markets are in Asia

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Five of 10 Fastest Growing Occupancy Cost Markets are in U.S.

London’s West End remained the world’s highest-priced office market but Asia continued to dominate the world’s most expensive office locations, accounting for three of the top five markets, according to CBRE Research’s semi-annual Global Prime Office Occupancy Costs survey. The study also found that prime rents are rising fastest in the Americas, where real estate fundamentals continue to improve. Overall, the U.S. accounted for five of the 10 markets with the fastest growing prime occupancy costs. These markets were Seattle (Suburban), San Francisco (Peninsula), Boston (Suburban), San Francisco (Downtown) and Seattle (Downtown).

London West End’s overall prime occupancy costs of US$274 per sq. ft. per year topped the “most expensive” list. Hong Kong (Central) followed with total prime occupancy costs of US$251 per sq. ft., Beijing (Finance Street) (US$198 per sq. ft.), Beijing (Central Business District (CBD)) (US$189 per sq. ft.) and Moscow (US$165 per sq. ft.) rounded out the top five.

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 percent year-over-year, led by the Americas (up 4.1 percent) and Asia Pacific (up 2.8 percent). Meanwhile, EMEA was essentially flat, edging up 0.3 percent year-over-year.

“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 EMEA, 20 were in Asia Pacific and 10 were in the Americas.  

Europe Middle East & Africa (EMEA)

The Eurozone’s tepid economic recovery has held back occupier activity, resulting in static prime occupancy costs in most core European markets. The region’s 0.3 percent year-over-year increase in prime occupancy costs was primarily driven by buoyant conditions in U.K. cities, most Nordic markets, and the strong recovery of the Dublin office market. The main decreases have been in central European markets, such as Warsaw (down 1.6 percent), where the economies are relatively healthy but new supply has driven down rents. In only a few markets, notably Dublin (up 34.9 percent) and London, a robust recovery in occupier demand coincided with a lack of new supply.

In addition to London West End, other markets from the region on the global top 10 list were Moscow (US$165 per sq. ft.) and London City (US$153 per sq. ft.).

Asia Pacific

Asia Pacific had 20 markets ranked in the top 50 most expensive, including seven of the top 10 - Hong Kong (Central), Beijing (Finance Street), Beijing (CBD), New Delhi (Connaught Place - CBD), Hong Kong (West Kowloon), Tokyo (Marunouchi Otemachi) and Shanghai (Pudong). Occupier activity in the region was largely driven by domestic corporations and companies in the technology, media and telecommunications sectors. Half the markets saw costs increase above 1 percent.

Hong Kong (Central) remained the only market in the world - other than London’s West End - with a prime occupancy cost exceeding $200 per sq. ft.

The most expensive market in the global ranking from the Pacific Region was Sydney (US$99 per sq. ft.), in 19th place.

Americas

In the U.S., where the economic recovery has firmly taken hold, strong leasing activity led to the highest level of quarterly net absorption since 2007, driving above-inflation increases in prime occupancy costs across all but one major U.S. market. Additionally, increasingly broad-based rising hiring rates have boosted demand for office space.

Eight North American markets recorded double-digit increases in prime occupancy costs in Q3 2014, and the top six growth markets in the Americas were all U.S. cities.

New York Midtown, the 11th most expensive market in the world, remained the most expensive Americas market, with a prime office occupancy cost of US$121 per sq. ft. 

Rio de Janeiro remained the most expensive market in Latin America, posting an office occupancy cost of US$101 per sq. ft. and ranking as the 18th most expensive market globally.

 

Top 10 Most Expensive Markets

(In US$ per sq. ft. per annum)

Rank            Market                                                            Occ. Cost

1                   London West End, United Kingdom               273.63

2                   Hong Kong (Central), Hong Kong                  250.61

3                   Beijing (Finance Street), China                      197.75

4                   Beijing (CBD), China                                      189.39

5                   Moscow, Russian Federationn                       165.05

6                   New Delhi (Connaught Place - CBD), India    158.47

7                   Hong Kong (West Kowloon), Hong Kong        153.65

8                   London City, United Kingdom                         152.67

9                  Tokyo (Marunouchi Otemachi), Japan             136.46

10                 Shanghai (Pudong), China                              127.89

Largest Annual Changes Occupancy Costs

(In local currency and measure)

Top 5 Increases

Rank            Market                                                            % Change

1                   Dublin, Ireland                                                34.9

2                   Manila, Philippines                                         20.7

3                   Seattle (Suburban), U.S.                                20.5

4                   Kuala Lumpur, Malaysia                                16.7

5                   Singapore, Singapore                                    16.5

Top 5 Decreases

Rank            Market                                                            % Change

1                   Santiago, Chile                                              -13.5

2                   Lyon, France                                                 -10.8

3                   Hong Kong (West Kowloon), Hong Kong      -9.8

4                   Bangalore (CBD), India                                 -8.5

5                   Palma de Mallorca, Spain                             -7.8

Note: The full Top 50 Most Expensive Markets chart is located at the end of this press release.Notes

       
  1. The Global Prime Office Occupancy Costs report is a survey of office occupancy costs for prime office space in 126 cities worldwide.
  2.   
  3. The latest survey provides data on office rents and occupancy costs as of September 30, 2014.
  4.   
  5. The Largest Annual Changes rankings are based upon occupancy costs  in local currency and measure. The Most Expensive ranking is based upon  occupancy costs in US$ per sq. ft. per annum.
  6.   
  7. 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.
  8.   
  9. Due to  methodology changes, comparisons with figures in previously released reports are not valid.
  10.   
  11. To obtain a  full copy of the report or to arrange to speak with a CBRE expert, please      contact Robert McGrath (robert.mcgrath@cbre.com)  or Corey Mirman (corey.mirman@cbre.com).

 

Top 50 Most Expensive Office Markets

(In US$ per sq. ft. per annum)

Rank (Q3 2014)     Market                                                            Occ. Cost       Rank (Q1 2014)

1                             London West End, United Kingdom            273.63            1

2                             Hong Kong (Central), Hong Kong                250.61            2

3                             Beijing (Finance Street), China                    197.75            3

4                             Beijing (CBD), China                                     189.39            4

5                             Moscow, Russian Federationn                     165.05           5

6                             New Delhi (Connaught Place - CBD), India  158.47           8

7                             Hong Kong (West Kowloon), Hong Kong    153.65           6

8                             London City, United Kingdom                      152.67           7

9                             Tokyo (Marunouchi Otemachi), Japan         136.46           9

10                           Shanghai (Pudong), China                            127.89          12

11                           New  York (Midtown Manhattan), U.S.          120.65          11

12                           San  Francisco (Downtown), U.S.                  114.00         15

13                           Paris, France                                                   113.95          10

14                           Singapore, Singapore                                     112.91          18

15                           Shanghai  (Puxi), China                                  112.14          14

16                           Mumbai (Bandra Kurla Complex), India        103.52          16

17                           Seoul  (CBD), South Korea                             102.55          20

18                           Rio de Janeiro, Brazil                                      101.34         13

19                           Sydney, Australia                                            99.06            17

20                           Boston (Downtown), US                                 96.25            22

21                           Geneva, Switzerland                                       93.83           19

22                           Seoul (Yeouido), South Korea                       92.84            24

23                           Dubai, United Arab Emirates                         92.56            23

24                           São Paulo, Brazil                                            91.78            21

25                           Washington,  D.C. (Downtown), U.S.             87.61           26

26                           Zurich, Switzerland                                         84.10           25

27                           Los Angeles (Suburban), U.S.                       83.62           30

28                           New York (Downtown Manhattan), U.S.        82.55           29

29                           Jakarta, Indonesia                                          81.81            31

30                           Istanbul, Turkey                                              81.44            28

31                           Perth, Australia                                               77.02            27

32                           Mumbai (Nariman Point - CBD), India           76.57            32

33                           Edinburgh, United Kingdom                          73.76            34

34                           Aberdeen, United Kingdom                           73.35            35

35                           Manchester, United Kingdom                        73.35            36

36                           Guangzhou, China                                          73.21            38

37                           Dublin, Ireland                                                 73.00             48

38                           San Francisco (Peninsula), U.S.                    72.57             46

39                           Birmingham,  United Kingdom                      71.32             39

40                           Stockholm, Sweden                                        70.88             33

41                           Bristol, United Kingdom                                70.51              40

42                           Glasgow, United Kingdom                             70.51              45

43                           Oslo, Norway                                                   68.30             44

44                           Taipei, Taiwan                                                  67.99             47

45                           Milan, Italy                                                        67.71             37

46                           Brisbane, Australia                                          67.43             43

47                           Leeds, United Kingdom                                   65.65            49

48                           Ho Chi Minh City, Vietnam                              65.35             42

49                           Frankfurt, Germany                                          65.12             41

50                           Mexico City, Mexico                                         62.48             51         

Source: CBRE Global Research and Consulting, Q3 2014

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue). The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

London’s West End remained the world’s highest-priced office market but Asia continued to dominate the world’s most expensive office locations, accounting for three of the top five markets, according to CBRE Research’s semi-annual Global Prime Office Occupancy Costs survey.

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CBRE's Neil Blake Comments on November Inflation Numbers

News   •   Dec 12, 2014 10:10 GMT

​This morning’s releases for November inflation numbers in Spain and Italy confirmed the low inflationary pressures evident in the data for Germany, France and Sweden released yesterday. Headline inflation fell in every country except Italy (where it stabilised) and now ranges from -0.4 in Spain to +0.6 in Germany.

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Investment in UK Student Accommodation Reaches £2.37 Billion

Press Releases   •   Dec 04, 2014 15:55 GMT

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Richard Dakin Joins CBRE as Managing Director of Capital Advisors

Press Releases   •   Nov 24, 2014 11:45 GMT

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CBRE Confirms A 60% Increase In Sales As Buyers Extend Their Search From Mayfair To Midtown

Press Releases   •   Nov 22, 2014 09:00 GMT

Property and construction professionals take top spot with price per sq ft values rising 2% - leading to an annual growth of 19% so far this year.

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World's Largest Air Quality Monitoring Network To Launch In London

Press Releases   •   Nov 20, 2014 09:00 GMT

​- Change London, In Partnership With CBRE And King & Wood Mallesons, To Breathe New Life Into The Capital Through The AirSensa Project -

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Hermes And ​CBRE Stand Tall With South Bank Tower Appointment

Press Releases   •   Nov 17, 2014 13:30 GMT

CBRE, the global property advisor, has been appointed by Hermes Real Estate and Canada Pension Plan Investment Board as part of their London joint venture, to manage 220,000 sq ft of office space at the South Bank Tower in London.

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Supermarket Convenience Store Growth Continues to Surge

Press Releases   •   Nov 04, 2014 11:28 GMT

Convenience stores from the big four grocers, Tesco, Sainsbury’s, Asda and Morrisons, continue to dominate sales growth but at the expense of some their own bigger stores, according to the latest
supermarket expansion report from CBRE and Retail Locations.  

The spread of convenience store openings, in tandem with both online grocery sales growth and
aggressive expansion activity of Aldi and Lidl, has progressively changed consumer shopping behaviour, encouraging repetitive top-up shopping that cannibalises some main grocery sales and weekly one stop shops at superstores.  The proliferation of convenience stores began to accelerate in 1996 following the introduction of ‘town-centre-first’ planning guidance. The convenience store outlets of the Big-four have since trebled in number.

Aldi and Lidl have sustained a high rate of new store openings, and steady market share growth,
for many years. Their store numbers have jumped by more than 300% since 1998, increasing their market share from 2.1% to 8.3%, according to Kantar Worldpanel. However this steady rate of growth doesn’t explain the sudden drop in the big four’s share of main grocery sales following 2011.

One contributing factor, also cannibalising store grocery sales, is the growth of online sales (which the discounters are not burdened with) which is proving heavily margin diluting.

Whilst hypermarket popularity is waning, superstore development activity shows no serious signs of slackening and will continue to capture the bulk of main grocery sales going forward.

Chris Keen, Director of Supermarket Landlord Advisory, CBRE, comments:

“We expect the big four’s current trading difficulties to suppress demand for large grocery superstores
in the short term, but demand pressures for small-format stores look unlikely to be affected. Sainsbury’s, M&S Simply Food, Waitrose, Asda, Aldi and Lidl all remain on the expansion trail for small stores.”

“Housing growth generally is stimulating a lot of ancillary grocery development activity, as are mixed-use developments and major infrastructure schemes such as Crossrail. The government’s ambitious plans for new towns and enlarged suburbs will further boost grocery space demand. And competition from grocers will push rents in catchments with growing populations. With net population migration set to remain high, pressure on UK grocery space – particularly space in southern markets – will inevitably remain strong, exerting a knock-on upward impact on demand over the medium term.”

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue). The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

Despite market share losses to discounters, UK grocers continue to open new stores

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CBRE Wins Contract For Airbus’ UK Facilities Management

Press Releases   •   Oct 29, 2014 10:45 GMT

CBRE, the global real estate advisor, today announced it has been appointed to provide facilities management (FM) services to Airbus at its two UK sites.

Following a tender process, CBRE was awarded the contract through its recently acquired technical engineering services arm, Norland Managed Services. The company will deliver mechanical and electrical engineering, building fabric, commercial and industrial cleaning, waste management, transportation and mailroom services, and grounds maintenance.

The agreement also includes a partnership between CBRE, Axis Cleaning and Support Services, and Biffa Integrated Resource Management, to provide cleaning and waste management services.

Ian Entwisle, CEO, Global Corporate Services (GCS) EMEA, CBRE commented:

“This appointment reflects the strength of our integrated FM credentials including our track record of operating in critical environments. Bringing these services under one contract will provide Airbus with many benefits including a single source provider, cost efficiencies and unrivalled expertise and knowledge in the integrated facilities management arena.”

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue). The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

CBRE, the global real estate advisor, today announced it has been appointed to provide facilities management (FM) services to Airbus at its two UK sites.

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CBRE Reports One Minute Less Commuting Time Increases House Prices By £11,400

Press Releases   •   Oct 29, 2014 09:00 GMT

Property prices are a third cheaper in locations 30-35 minutes commute from Central London, CBRE has reported in its latest Regional Land report. The findings also reveal that an increase of one minute travel time reduces a house price value by around £11,400.

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About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue). The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.