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Global Office Rents and Real Estate Values Little Changed During Q2 2012

CBRE’s Global Office Rent and Global Capital Value Indices Increase Modestly Driven by Occupier and Investor Appetite for Prime Office Space

Los Angeles, August 9, 2012 - Global office rents and real estate values increased modestly during Q2 2012, with both the CBRE Global Office Rent and Global Capital Value Indices, rising by 0.3%. The modest increases reflect the global economic slowdown that continues to hamper the real estate recovery.

"Rental rates and capital value improvements have slowed dramatically following considerable recoveries during 2011," said Dr. Raymond Torto, CBRE Global Chief Economist. "However, despite the economic uncertainty, this quarter provided evidence, that while both occupiers and investors remain highly cost conscious, they are also forging ahead with expansions or investments in prime spaces. This dynamic has helped to bolster rental rates and capital values ever-so-slightly, and particularly in the U.S. market."

CBRE Global Office Rent Indices

  • The U.S. leasing market is noticeably stronger than other regions as rent growth has remained positive while other regions have flattened. As a result, the Americas region recorded both the strongest quarter-over-quarter and year-over-year growth rates-1.0% and 3.0%, respectively.
  • Asia Pacific rents were essentially flat during the quarter, and significantly short of the 13.4% annual increase witnessed in Q2 2011
  • Regional performance varied widely. For example, Hong Kong quickly rebounded after the recession and reached its pre-recession rental peak in 2011. However, since then, Hong Kong rents have softened as occupiers seek to contain costs. Meanwhile, Bangkok rents continue to move higher propelled by continued strong demand and limited future supply of Grade A stock in the best locations.
  • Amidst weak occupier sentiments in EMEA, the EMEA Rent Index was slightly negative once again this quarter, reflecting the uncertainty surrounding the European Sovereign Debt Crisis. Regional differences exist in EMEA as markets in more stable economies such as the Nordics and Germany have performed better, and some markets-such as Dusseldorf and Munich—are expected to see continued upward movement in rents in the near term.

 

 
 

 

CBRE Global Capital Value Indices

  • With the exception of the Americas, the Global and Regional Capital Value Indices have seen little or no improvement since Q3 2011.
  • The relative strength of the Americas (posting a 1.5% quarterly growth) has driven the Global Capital Value index upward at a modest rate. However, the global growth rate has been weakened by the EMEA Capital Value Index, which fell 1.0% this quarter (its third consecutive quarterly setback). Meanwhile, the Asia Pacific Index level has held steady for the past several quarters.
  • Risk-averse sentiment continues drive property investors toward the highly liquid, gateway markets. As such, asset values have strengthened most in the U.S. gateway markets—including New York, Chicago, San Francisco and Boston—due in part to these markets’ supply of trophy assets and their perceived liquidity.
  • Asia Pacific has not seen much change in the first half of 2012, but notably, it is the only index where property values returned in 2011 to its pre-recession peak back.

 

 
 

 

The CBRE Indices were created by CBRE Research. The Global Office Rent Index is comprised of data from 123 cities around the world. The Global Capital Value Index uses the same sample for EMEA and Asia Pacific, while the Americas data is derived from the National Council of Real Estate Investment Fiduciaries (NCREIF) and is not built up city by city the same way as is the rent index data. The base period for the indices is Q1 2001.

To speak with a CBRE expert, please contact Robert McGrath (212.984.8267 or Robert.McGrath@cbre.com).

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 firm (in terms of 2011 revenue). The Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management;​

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