London remains world’s most expensive office market
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 Global Research and Consulting’s semi-annual Global Prime Office Occupancy Costs survey.
The study also found that rents are rising fastest in the Americas, where real estate fundamentals continue to improve significantly.
Europe Middle East & Africa (EMEA)
EMEA was home to the world’s most expensive market, with London West End at US$277 per sq. ft. per annum. Development restrictions in the West End keep vacancy rates comparatively very low. The improvement in the U.K. economy has triggered a strong recovery in the demand for space. This demand, along with the shortage of available space, has been putting upward pressure on prime rents throughout 2013 and into 2014.
Other markets from the region in the list’s top 10 are Moscow (US$165 per sq. ft.), London City (US$154 per sq. ft.) and Paris (US$124 per sq. ft.).
Richard Holberton, Senior Director, EMEA Research at CBRE, added: "EMEA is an interesting region. It has four of the top ten most expensive office markets, including the world's most expensive, and two of the top fiver risers. Yet, it also accounts for three of the top five fallers. This shows that the EMEA office market is hugely diverse, reflecting an uneven pace of recovery from the European debt crisis, which has hit markets for much of the last 6 years.
“Looking ahead, as economic sentiment improves, demand for prime office space is expected to accelerate which will be compounded by a weak office construction pipeline. This means three things for occupiers, act now to secure leases in prime buildings, strike attractive deals by de-risking pre-lets which might otherwise not be fundable, or snap-up accessible and good quality secondary space at attractive rates as there is a surplus in some markets."
Konrad Heidinger, Consultant at the Research Team at CBRE in Poland, added: “Warsaw is ranked 60th on the list of most expensive office destinations in the world. Despite the fall of the highest rents in the last few quarters, the Polish capital jumped up 3 places in the ranking compared to last year. This improved position in the pecking order may be attributed mainly to the stronger drop in rents in other cities that participated in the classification. In the area of most expensive office markets, we are currently observing a trend of polarization. The top destinations are becoming more and more expensive, whereas many lower-ranked cities experienced drops in rent fees in recent times. In relation to the large number of offices being constructed in downtown Warsaw, further pressure on the decrease in rental rates is expected, nevertheless the office demand in Poland’s capital still remains at a very high level.“