Hong Kong Central remained the most expensive office market in the world, according to CBRE’s annual Global Prime Office Occupancy Costs report.
Hong Kong Central’s overall prime occupancy costs of €2,678 per sqm per year topped the “most expensive” list, followed by London West End (€2,053 per sqm), Beijing Finance Street (€1,755 per sqm), Hong Kong Kowloon (€1,656 per sqm) and Beijing Central Business District (€1,655 per sqm).
Global prime office occupancy costs - which reflect rent, plus local taxes and service charges for the highest-quality, “prime” office properties- rose 2.4 per cent year-over-year, with the Americas up 3.2 per cent, EMEA up 2 per cent and Asia Pacific up 1.7 per cent.
“For the first time in this cycle, prime office occupancy cost growth was consistent across all regions,” said Richard Barkham, global chief economist, CBRE. “Global economic growth has stimulated robust leasing activity, particularly in EMEA and APAC. While occupancy cost growth in the Americas slowed slightly compared to a year earlier, it remains the region with the overall largest increase in costs. We expect global office occupancy costs to increase by approximately 2 per cent in the year ahead”.
Durban, South Africa, fuelled by strong demand from business-process outsourcing companies, had the highest increase in year-over-year occupancy cost overall, followed by Bangkok, Marseille, Vancouver Downtown and Oslo.
Vancouver Downtown showed the largest increase in the Americas, followed by Downtown Manhattan, Toronto Downtown, Los Angeles Suburban, Midtown South Manhattan and Dallas Downtown. Costs in Midtown South Manhattan reached an all-time high as strong demand for premium space continued.
In Asia Pacific, Bangkok had the highest growth, followed by Hong Kong Kowloon, Singapore, Melbourne and Wellington. Durban, Marseille, Oslo, Stockholm and Berlin led EMEA in occupancy cost growth. Dubai, Shanghai Puxi, Midtown Manhattan, Moscow and Abu Dhabi saw the largest decrease year-over-year.
“The dominant trend among markets with notably rising prime occupancy costs is strong demand from the finance, technology and e-commerce sectors,” said Dr. Barkham. “Markets with declining occupancy costs are primarily affected by supply/demand imbalances resulting from new completions. Since reduced costs due to excess inventory tend to be relatively short-lived.”
Budapest remains attractively priced in the EU
”In the middle of the current construction boom, a number of pipeline developments are pushing the city’s prime quote and average rent profile higher. CBRE quote prime office occupancy cost level in Budapest at €28.5 per sqm per month with a note that some recent lease transactions have broken above this level already. Looking beyond the prime end of the market, Class A offices are priced at €19.6 per sqm as of Q1 2018. The city still remains attractively priced in the EU, despite steadily climbing average asking rents”, Gábor Borbély MRICS, Head of Research and Business Development at CBRE Hungary added.
