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London (West End) Again World’s Most Expensive Office Market; Tokyo’s Inner Central Market Ranks Second

CB Richard Ellis Group, Inc. Report Finds Global Rents Continue Decline

Los Angeles — December 1 , 2009 — London’s West End is again 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. Tokyo’s Inner Central has slipped to second place, followed by that city’s Outer Central market. Hong Kong’s Central Business District (CBD) and Moscow are fourth and fifth respectively in the CBRE report, which tracks office occupancy costs in nearly 180 cities around the globe.

Office markets worldwide are experiencing declines in prime office occupancy costs. The year-over-year change in prime office occupancy costs of the 179 markets monitored revealed an average drop of 7.7% worldwide over the 12-month period ending September 30, 2009 (in local currency and on an un-weighted average basis). The majority of markets – 131 markets in total – experienced a year-over-year decline including nearly 50 which saw rents tumble by double-digit percentage-points.

Many of the world’s bellwether   financial centers are at the top of the list of fastest changing markets, including Hong Kong Central CBD(-40.7%) and New York, Midtown(-29.7%) along with emerging markets such as Ho Chi Minh City(-45.4%) and Abu Dhabi(-38.6%).   Kiev led the world with the largest year-over-year decrease in office occupancy costs, falling 64.6% from year-ago levels.

“While there are signs that commercial real estate values are stabilizing in some markets in Asia and parts of London, underlying property fundamentals are still weak,” said Dr. Raymond Torto, CBRE’s Global Chief Economist. ”However the office market may be on the cusp of moving from intensive care to the stabilization stage - the first step to getting back to good health.”

Forty-one markets experienced positive growth. Aberdeen, Scotland and Rio de Janeiro, Brazil both grew by more than 10% as not all markets have been as affected by the decline in global demand and demand for office space has proven resilient in some areas due to the local market dynamics.

Office occupancy costs measured in U.S. dollars are affected by changes in the dollar’s value versus the respective local currency. Hence, office occupancy costs when converted into U.S. dollars are driven by both the local market dynamics of supply and demand, as well as currency changes.

Asia-Pacific
Tokyo (Inner Central) was Asia’s most expensive market with an occupancy cost of $172 per sq. ft. while that city’s Outer Circle market was second with occupancy costs of $139 per sq. ft. Hong Kong (CBD) follows with occupancy costs of $138 per sq. ft. Mumbai and New Delhi were the other two Asia-Pacific markets in the world’s top 10 most expensive cities roster. For the Asia Pacific region, the office markets that experienced the largest decreases include Singapore (-53.4%), Ho Chi Minh City (-45.4%), as well Hong Kong which declined over 30% in the past year.   The Asia-Pacific region had 17 cities with double-digit declines in office occupancy costs.  

Europe
London ’s West End was the world’s most expensive office market at $185 per sq. ft. Moscow was second in Europe with occupancy costs at $132 per sq. ft. Dubai, Paris and the City of London all were in the top ten most expensive markets.    Kiev led the world with the largest year-over-year decrease in office occupancy costs, falling 64.6% from year-ago levels. Other markets in Europe that are experiencing the largest decreases include Moscow, Oslo, Warsaw and Dublin.   The EMEA region had 17 cities with double-digit declines in office occupancy costs.

Americas
Two cities in Brazil -- Rio de Janeiro and São Paolo -- have supplanted New York’s Midtown as the most expensive office location in the Americas.   Rio de Janeiro’s occupancy costs of $87 per sq. ft., was good for twelfth place on the global list, while   São Paulo came in at 16th globally with occupancy averaging $82 per sq. ft.   New York’s Midtown’s market has dropped to third in the Americas and 24th globally with occupancy costs of $69 per sq. ft. Boston ’s CBD led the Americas, with a decline of 33.9% year-over-year, followed by New York’s Downtown and Midtown markets.   Fifteen markets in North America posted double-digit declines. Meanwhile, Latin America held up stronger than the rest of the world, with only six cities registering a decline, including a 6.3% decrease in Buenos Aires, Argentina.  

Top Ten
Most Expensive Markets

 

Fastest Changing
Occupancy Costs

(In US$ per sq. ft. per annum)
1. London (West End)

2. Tokyo, (Inner Central)

3. Tokyo (Outer Central)

4. Hong Kong (CBD)

5. Moscow

6. Paris

7. Mumbai

8. Dubai

9. London (City)

10. New Delhi (CBD)

US$/SF/annum
184.85

171.64

139.09

137.61

131.55

122.51

121.11

108.91

108.83

88.92

(In local currency & measure)
Top 5 Decreases

1. Kiev (Ukraine)

2. Singapore

3. Ho Chi Minh City

4. Hong Kong (CBD)

5. Abu Dhabi


Top 5 Increases

1. Aberdeen (Scotland)

2. Rio de Janeiro

3. Istanbul

4. Panama City

5. Edmonton


% Change

-64.6

-53.4

-45.4

-40.7

-38.6


12.3

12.1

  9.0

  7.7

  5.8

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

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 2008 revenue).   The Company has approximately 30,000 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. CB Richard Ellis has been named a BusinessWeek 50 “best in class” company three years. Please visit our Web site at www.cbre.com.

Notes to Editors

  1. Global MarketView/Office Occupancy Costs is a survey of office occupation costs for prime office space in nearly 180 cities worldwide.
  2. The latest survey provides data on office rents and occupancy costs as of September 30, 2009. 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.   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.
    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, 2009

Rank

Market

  US$/sq ft/ annum

€/sq m/ month

  £/sq ft/ annum

Aus$/sq m/ annum

Can$/sq ft/annum

¥/sq ft/ annum

1

London (West End), England

184.85

113.29

115.50

2,252

197.60

16,590

2

Tokyo (Inner Central), Japan

171.64

105.20

107.25

2,091

183.48

15,405

3

Tokyo , (Outer Central), Japan

139.09

85.25

86.91

1,695

148.68

12,483

4

Hong Kong (Central CBD)

137.61

84.34

85.98

1,677

147.10

12,350

5

Moscow , Russia

131.55

80.63

82.20

1,603

140.63

11,807

6

Paris , France

122.51

75.09

76.55

1,493

130.97

10,995

7

Mumbai (CBD), India

121.11

74.23

75.67

1,476

129.46

10,869

8

Dubai , United Arab Emirates

108.91

66.75

68.05

1,327

116.42

9,775

9

London (City), England

108.03

66.21

67.50

1,316

115.48

9,696

10

New Delhi (CBD), India

88.92

54.50

55.56

1,083

95.05

7,980

11

Luxembourg City , Luxembourg

88.66

54.34

55.40

1,080

94.77

7,957

12

Rio de Janeiro , Brazil

87.47

53.61

54.66

1,066

93.51

7,850

13

Milan , Italy

84.42

51.74

52.75

1,029

90.24

7,576

14

Abu Dhabi , United Arab Emirates

84.40

51.73

52.74

1,028

90.23

7,575

15

Zurich , Switzerland

83.41

51.13

52.12

1,016

89.17

7,486

16

São Paulo , Brazil

81.81

50.14

51.12

997

87.45

7,342

17

Dublin , Ireland

81.31

49.83

50.80

991

86.92

7,297

18

Geneva , Switzerland

78.93

48.38

49.32

962

84.38

7,084

19

Istanbul , Turkey

77.44

47.46

48.39

944

82.78

6,950

20

Frankfurt am Main , Germany

75.44

46.24

47.14

919

80.64

6,770

21

Hong Kong (Citywide)

75.20

46.09

46.99

916

80.39

6,749

22

Edinburgh , Scotland

72.02

44.14

45.00

878

76.99

6,464

23

Manchester , England

71.22

43.65

44.50

868

76.13

6,392

24

New York   Midtown, U.S.

68.93

42.25

43.07

840

73.69

6,186

25

Rome , Italy

68.73

42.12

42.94

837

73.47

6,168

26

Stockholm , Sweden

67.94

41.64

42.45

828

72.63

6,098

27

Madrid , Spain

67.66

41.47

42.28

824

72.33

6,073

28

Birmingham , England

67.22

41.20

42.00

819

71.85

6,033

29

Glasgow , Scotland

66.42

40.71

41.50

809

71.00

5,961

30

Aberdeen , Scotland

65.62

40.22

41.00

800

70.14

5,889

31

Athens , Greece

64.38

39.46

40.23

785

68.83

5,779

32

Singapore , Singapore

63.89

39.16

39.92

779

68.30

5,734

33

Seoul (CBD), South Korea

63.26

38.78

39.53

771

67.63

5,678

34

Perth , Australia

63.16

38.71

39.46

770

67.52

5,668

35

Leeds , England

62.42

38.26

39.00

761

66.72

5,602

36

Munich , Germany

61.86

37.91

38.65

754

66.12

5,552

37

Bristol , England

60.82

37.27

38.00

741

65.01

5,458

38

Toronto (CBD), Canada

60.78

37.25

37.98

741

64.97

5,455

39

Shanghai (Pudong), China

59.41

36.41

37.12

724

63.50

5,332

40

Oslo , Norway

58.51

35.86

36.56

713

62.55

5,251

41

Amsterdam , Netherlands

54.44

33.37

34.02

663

58.20

4,886

42

Brussels , Belgium

54.06

33.13

33.78

659

57.79

4,851

43

Jersey , England

54.01

33.11

33.75

658

57.74

4,848

44

Shanghai (Puxi), China

53.32

32.68

33.32

650

57.00

4,785

45

Warsaw , Poland

52.57

32.22

32.85

641

56.20

4,718

46

Prague , Czech Republic

52.55

32.21

32.84

640

56.18

4,717

47

Vancouver (CBD), Canada

52.44

32.14

32.77

639

56.06

4,707

48

Sydney (Core), Australia

52.05

31.90

32.52

634

55.64

4,671

49

Calgary (CBD), Canada

51.91

31.82

32.43

632

55.49

4,659

50

Washington , DC (CBD), U.S.

51.74

31.71

32.33

630

55.31

4,644

Source: CB Richard Ellis Research

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