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London (West End) Remains World's Most Expensive Office Market; Hong Kong (CBD) Second; Tokyo Inner Central Third
Survey Finds Global Rents Beginning To Stabilize, 1.3% Decline from One Year Ago

LOS ANGELES, Nov 10, 2010 (BUSINESS WIRE) -- London's West End continues to be the world's most expensive office market, according to CB Richard Ellis Group, Inc. (CBRE) Global Research and Consulting's semi-annual Global Office Rents survey. Hong Kong's Central Business District (CBD) continued in second place and also recorded the fastest year-over-year occupancy cost rise with a 34.2% increase. Tokyo's Inner Central remained the third most expensive market for office space. Mumbai held its fourth place position on the list while Moscow remains fifth in the CBRE rankings, which track occupancy costs for prime office space in 175 cities around the globe.

"Major markets in emerging economies feature prominently at the top of the list of most expensive office costs as measured in dollars per square foot," said Dr. Raymond Torto, CBRE's Global Chief Economist. "This pattern developed just a few years ago and it is more pronounced today."

The survey finds that on a year-over-year basis, occupancy costs are beginning to find their cyclical lows worldwide. Ninety-nine of these markets--still a majority--experienced decline, with 19 still registering double-digit percentage-point drops over the past 12 months. However, sixty-one markets saw occupancy costs for the year rise. Occupancy costs in fifteen markets were unchanged during that time period. The year-over-year change in office occupancy costs for the 175 markets monitored revealed a drop of only 1.3% worldwide.

Among the markets exhibiting the most significant gains were global gateway markets such as Hong Kong (Central CBD), London City and São Paulo. Gateway markets that posted more moderate gains included Paris, Shanghai and Washington, D.C.

While comparisons in dollars are affected by currency exchange rates, annual percent change calculations are based upon occupancy costs in local currency and measurement and not influenced by currency changes.

Asia-Pacific

Asia Pacific once again had 13 markets rank in the top 50 most expensive, with three of the top five (Hong Kong Central CBD, Tokyo Inner Central and Mumbai) most expensive markets. Hong Kong (Central CBD), with an occupancy cost of US$184.21 per sq. ft. (up from US$153.20 per sq. ft. six months ago), was first in the region followed by Tokyo's Inner Central, with an occupancy cost of US$158.08 per sq. ft. Mumbai, with an occupancy cost of US$130.41 per sq. ft., ranked third in the region.

The most expensive market in the global ranking from the Pacific Region was Perth (US$59.63 per sq. ft.), which came in at 35th, despite also experiencing the sixth-largest decline in local currency, at negative 15.8%.

Asia Pacific has shown measurable improvement over the past six months, led by substantial year-over-year occupancy-cost increases in Hong Kong (Central CBD), Hong Kong (Citywide) and Beijing, with gains of 34.2%, 23.9% and 11.5%, respectively. More than half of the markets in the region are now posting gains in occupier costs compared to a year ago. Increased economic activity in the Pacific Rim has bolstered demand, and increases in the strength of the Chinese yuan allowed costs to rise relative to other markets. Twelve of these markets experienced declines and 13 markets saw occupancy costs for the year rise.

Europe Middle East & Africa (EMEA)

EMEA continues to have the most markets on the top 50 list with 30 markets. London's West End is still the world's most expensive market with an occupancy cost of US$193.69 per sq. ft., up from US$182.94 per sq. ft. six months ago. Other markets in the region that top the list are Moscow (occupancy cost of US$128.33 per sq. ft.), London (City) (US$124.59 per sq. ft.), Paris (US$115.72 per sq. ft.), and Dubai (US$95.32 per sq. ft.).

EMEA showed some signs of stabilization as the Eurozone recovery continued. Less than one-third of all EMEA markets posted occupancy cost gains. London City posted the largest gain for the region as its occupier costs grew by 17.5%, followed by Tel Aviv (13.4%). The largest declines were again among markets impacted by real estate overbuilding and speculation, such as Dubai (-12.5%) and Dublin (-12.4%). Twenty-eight of these markets experienced declines and 16 markets saw occupancy costs for the year rise.

Americas

North America is led by Midtown New York, which posted an office occupancy cost of US$66.59 per sq. ft. While office occupancy costs in Midtown New York are high for North America, that market ranked just 26th globally.

North American markets, for the most part, have not seen occupancy costs begin to recover yet. Less than one-third of North American office markets experienced increases in occupancy costs over the past year. Atlanta (CBD) experienced the largest year-over-year increase, at 7.0%. New York, the largest office market in the U.S., saw occupancy costs decline by 7.6% (Downtown) and 4.5% (Midtown). Fifty-five of these markets experienced declines and 21 markets saw occupancy costs for the year rise.

In Latin America, São Paulo, which ranked just ahead of Rio de Janeiro, remains the most expensive market, posting an office occupancy cost of US$109.03 per sq. ft. São Paulo now ranks as the 9th most expensive market globally. Meanwhile, with an occupancy cost of $104.40 per sq. ft., Rio de Janeiro has moved into the global top 10 on the strength of its local premium office market combined with the appreciation of the Brazilian real against the U.S. dollar over the past year.

Latin America is holding up better than the rest of the world and continues to post gains. Of the region's 15 markets, only four experienced declines. Brazil saw the largest increases, in São Paulo (26.9%) and Rio de Janeiro (13.7%). Brazil's recovery began in 2Q 2009, so the annual change is reflective of the trough for that country's office market.

Top Ten
Most Expensive Markets

Fastest Changing
Occupancy Costs

(In US$ per SF per annum)

1.) London West End, United Kingdom

2.) Hong Kong (Central CBD)

3.) Tokyo, (Inner Central), Japan

4.) Mumbai, India

5.) Moscow, Russian Federation

6.) Tokyo (Outer Central), Japan

7.) London City, United Kingdom

8.) Paris Ile-de-France, France

9.) São Paulo, Brazil

10.) Rio de Janeiro, Brazil

US$/SF/annum

193.69

184.21

158.08

130.41

128.33

127.31

124.59

115.72

109.03

104.40

(In local currency & measure)
Top 5 Decreases

1.) Edmonton, Canada

2.) Orlando, United States

3.) Monterrey, Mexico

4.) Valencia, Spain

5.) Perth, Australia

Top 5 Increases

1.) Hong Kong (Central CBD)

2.) São Paulo, Brazil

3.) Hong Kong (Citywide)

4.) London City, United Kingdom

5.) Rio de Janeiro, Brazil


% Change

-19.4

-17.8

-16.9

-15.9

-15.8

% Change

34.2

26.9

23.9

17.5

13.7

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

Notes to Editors

1. Global MarketView/Office Occupancy Costs is a survey of office occupation costs for prime office space in 175 cities worldwide.

2. The latest survey provides data on office rents and occupancy costs as of September 30, 2010

3. The Fastest Changing 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.

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. To obtain a full copy of the report or to arrange to speak with a CBRE expert, please contact Robert McGrath at 212.984.8267 or robert.mcgrath@cbre.com.

Top 50 Most Expensive Office Markets as of September 30, 2010

Rank Market

US$/sq ft/annum

EUR /sq m/annum £/sq ft/annum Aus $/sq m/annum Can$/sq ft/annum ¥ /sq ft/annum
1 London West End, United Kingdom 193.69 1529.62 123.28 2,157 199.24 16,163
2 Hong Kong (Central CBD) 184.21 1454.78 117.25 2,051 189.49 15,372
3 Tokyo, (Inner Central), Japan 158.08 1248.40 100.61 1,760 162.61 13,191
4 Mumbai, India 130.41 1029.89 83.00 1,452 134.15 10,883
5 Moscow, Russian Federation 128.33 1013.46 81.68 1,429 132.01 10,709
6 Tokyo (Outer Central), Japan 127.31 1005.42 81.03 1,418 130.96 10,624
7 London City, United Kingdom 124.59 983.93 79.30 1,387 128.16 10,397
8 Paris Ile-de-France, France 115.72 913.86 73.65 1,288 119.04 9,656
9 São Paulo, Brazil 109.03 861.06 69.40 1,214 112.16 9,099
10 Rio de Janeiro, Brazil 104.40 824.50 66.45 1,162 107.40 8,712
11 New Delhi, India 101.21 799.30 64.42 1,127 104.11 8,446
12 Dubai, United Arab Emirates 95.32 752.75 60.67 1,061 98.05 7,954
13 Hong Kong (Citywide) 92.53 730.72 58.89 1,030 95.18 7,721
14 Geneva, Switzerland 86.08 679.84 54.79 959 88.55 7,184
15 Zurich, Switzerland 84.19 664.89 53.59 937 86.61 7,026
16 Luxembourg City, Luxembourg 82.57 652.07 52.55 919 84.94 6,890
17 Istanbul, Turkey 78.77 622.11 50.14 877 81.03 6,574
18 Milan, Italy 78.62 620.88 50.04 875 80.87 6,561
19 Stockholm, Sweden 73.27 578.64 46.64 816 75.37 6,114
20 Abu Dhabi, United Arab Emirates 72.11 569.46 45.90 803 74.18 6,017
21 Seoul CBD, South Korea 70.97 560.51 45.17 790 73.01 5,923
22 Frankfurt am Main, Germany 70.26 554.84 44.72 782 72.27 5,863
23 Edinburgh, United Kingdom 69.91 552.14 44.50 778 71.92 5,834
24 Manchester, United Kingdom 68.34 539.74 43.50 761 70.30 5,703
25 Singapore, Singapore 67.56 533.59 43.00 752 69.50 5,638
26 New York Midtown, U.S. 66.59 525.89 42.38 741 68.50 5,557
27 Dublin, Ireland 66.35 524.00 42.23 739 68.25 5,537
28 Birmingham, United Kingdom 64.88 512.38 41.29 722 66.74 5,414
29 Rome, Italy 64.01 505.49 40.74 713 65.84 5,341
30 Glasgow, United Kingdom 63.63 502.51 40.50 708 65.46 5,310
31 Aberdeen, United Kingdom 63.57 502.08 40.47 708 65.40 5,305
32 Shanghai (Pudong), China 61.82 488.25 39.35 688 63.60 5,159
33 Oslo, Norway 61.55 486.13 39.18 685 63.32 5,137
34 Athens, Greece 61.47 485.45 39.13 684 63.23 5,130
35 Perth, Australia 59.63 470.93 37.95 664 61.34 4,976
36 Toronto (CBD), Canada 59.07 466.54 37.60 658 60.77 4,930
37 Leeds, United Kingdom 58.13 459.09 37.00 647 59.80 4,851
38 Madrid, Spain 57.65 455.29 36.69 642 59.31 4,811
39 Sydney (Core), Australia 57.12 451.10 36.36 636 58.76 4,767
40 Beijing, China 56.90 449.39 36.22 634 58.54 4,749
41 Shanghai (Puxi), China 55.58 438.96 35.38 619 57.18 4,638
42 Brussels, Belgium 55.25 436.36 35.17 615 56.84 4,611
43 Munich, Germany 55.10 435.16 35.07 614 56.68 4,598
44 Helsinki, Finland 53.89 425.56 34.30 600 55.43 4,497
45 Buenos Aires, Argentina 53.26 420.62 33.90 593 54.79 4,445
46 Washington, DC (CBD), U.S. 53.03 418.80 33.75 590 54.55 4,425
47 Jersey, United Kingdom 53.02 418.72 33.75 590 54.54 4,425
48 Tel Aviv, Israel 52.95 418.21 33.71 590 54.47 4,419
49 Vancouver (CBD), Canada 52.81 417.10 33.62 588 54.33 4,407
50 Warsaw, Poland 52.34 413.33 33.31 583 53.84 4,368

Source: CB Richard Ellis Global Research and Consulting

About CB Richard Ellis

CB Richard Ellis 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 firm (in terms of 2009 revenue). The Company has approximately 29,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis 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.

SOURCE: CB Richard Ellis Group, Inc.

CB Richard Ellis Group, Inc.
Robert McGrath, 212.984.8267
robert.mcgrath@cbre.com