Skip Ribbon Commands Skip to main content

CBRE Says Hong Kong-Central Remains World’s Most Expensive Office Market; London-West End & Tokyo Follow

Technology Sector Propels San Francisco to Largest Prime Occupancy Cost Rise
Among World Office Markets
* * *
Asia-Pacific Continues to Have Six of the World’s Top Ten “Most Expensive” Markets
* * *
Prime Occupancy Costs Increase 2% Worldwide From Year Ago

Los Angeles — December 17, 2012 — The dominance of Asia-Pacific in the top 10 most expensive business locations worldwide continued, led by Hong Kong-Central – the world’s most expensive market -- and five other Asian markets, according to CBRE Global Research and Consulting’s semi-annual Prime Office Occupancy Costs survey. However it was a U.S. market, San Francisco (Downtown) that had the strongest year-over-year increase in prime office occupancy costs with a 36.4% rise driven by that market’s hot technology sector.  

Hong Kong Central led the “most expensive” list with overall occupancy costs of US$246.30 per sq. ft. per year This topped London’s West End, which had total occupancy costs of US$219.81. Tokyo (Marunouchi Otemachi) was the third most expensive market for office space, followed by Beijing’s CBD and New Delhi’s CBD. Other Asia-Pacific markets in the top ten include Beijing-Finance Street (6th) and Hong Kong-West Kowloon (7th).

Despite economic headwinds, occupancy costs increased by an average of 2.1% worldwide over the past year, led by the Americas with a 5.2% annual increase and Asia Pacific with a 2.6% increase. EMEA continued to be hindered by economic recession in much of Europe and recorded a 0.4% decrease in prime occupancy costs. Prime office occupancy costs increased in 74 markets, decreased in 37 office markets and had no change in 22 markets.

“The global office market recovery cooled over the past year, hampered by the ongoing European debt crisis, a deceleration of growth in emerging markets and ubiquitous  uncertainty created by the ‘fiscal cliff’ in the U.S.,” said Dr. Raymond Torto, CBRE’s Global Chief Economist. “However, tight market conditions, strong demand for high quality space and low levels of new construction continue to drive up occupancy costs in many prime office markets across the globe.”

CBRE tracks occupancy costs for prime office space in 133 markets around the globe. Of the top 50 “most expensive” markets, 19 are in EMEA, 18 are in Asia-Pacific and 13 in the Americas.

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

Asia Pacific

Asia Pacific had 18 markets ranked in the top 50 most expensive, with four of the top five—Hong Kong-Central, Tokyo (Marunouchi Otemachi), Beijing CBD and New Delhi’s Connaught Place CBD. Hong Kong Central’s position as the most expensive office market continued to be driven by limited new supply and tight market conditions. Despite its most-expensive ranking, Hong Kong Central experienced the largest annual decrease worldwide (-17.8%) as cost-cutting among large financial institutions and big banks dramatically lowered prime office occupancy costs. The most expensive market in the global ranking from the Pacific Region was Sydney (US$119.04 per sq. ft.), which came in at 14th.

Americas

North America is led by New York’s Midtown, which posted an office occupancy cost of US$114.30 per sq. ft., on the strength of a 7.3% year-over-year increase. The New York Midtown market was ranked 16th globally.

San Francisco (Downtown) experienced the largest year-over-year increase, at 36.4%, of the 133 markets tracked with an occupancy cost of $90.00 per sq. ft. San Francisco’s Peninsula market was not far behind, rising 28.6% to reach $62.10 per sq. ft. Many of the markets with the largest increases in prime occupancy costs have seen strong demand from the energy, automotive or high-tech sectors, as well as low vacancies and limited prospects for new supply. As a result, occupancy costs have increased rapidly in San Francisco, Seattle (Suburban), Calgary (Downtown), Vancouver (Downtown), Denver (Downtown) and Houston (Suburban).

In Latin America, São Paulo remains the most expensive market, posting an office occupancy cost of US$130.07 per sq. ft., and ranks as the 10th most expensive market globally. Meanwhile, with an occupancy cost of $121.40 per sq. ft., Rio de Janeiro is also in the top 12.

Europe Middle East & Africa (EMEA)

In addition to London’s West End ranking as the world’s second-most expensive market, other markets in the region that top the list are Moscow (occupancy cost of US$172.82 per sq. ft.) and London’s City (US$131.76 per sq. ft.).

Continuing economic contraction in the euro zone led to double-digit or near-double-digit declines in prime occupancy costs in Thessaloniki and Athens, Greece, and Malaga, Spain, as business sentiment suffered and occupiers remained cautious. Subdued demand also led to occupancy cost declines in Portugal and Ireland.

Top Ten Most Expensive Markets

(In US$ per sq. ft. per annum)

Rank Mar​ket
Occ. Cost
1
Hong Kong (Central), Hong Kong
246.30
2
London - Central (West End), United Kingdom
219.81
3
Tokyo (Marunouchi Otemachi), Japan
197.27
4
Beijing (CBD), China
184.95
5
New Delhi (Connaught Place - CBD), India
183.30
6
Beijing (Finance Street), China
179.57
7
Hong Kong (West Kowloon), Hong Kong
174.13
8
Moscow, Russian Federation
172.82
9
London - Central (City), United Kingdom
131.76
10
São Paulo, Brazil
130.07

Largest Annual Changes Occupancy Costs

(In local currency & measure)

Top 5 Increases

Rank Mar​ket
% Change
1
San Francisco (Downtown), U.S.
36.4
2
Jakarta, Indonesia
28.7
3
San Francisco (Peninsula), U.S.
28.6
4
Seattle (Suburban), U.S.
21.8
5
Beijing (Finance Street), China
19.7

Top 5 Decreases

Rank M​arket
% Change
1
Hong Kong (Central), Hong Kong
-17.8
2
Singapore, Singapore
-17.7
3
Thessaloniki, Greece
-14.8
4
Malaga, Spain
-10.8
5
Athens, Greece
-9.5

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

Notes to Editors

  1. The Prime Office Occupancy Costs report is a survey of office occupancy costs for prime office space in 133 cities worldwide.
  2. The latest survey provides data on office rents and occupancy costs as of September 30, 2012.
  3. The Largest Annual Changes 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. Due to methodology changes comparisons with figures in previously released reports are not valid.
  6. 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, 2012

Rank M​​arket
Occ. Cost (US$)
1
Hong Kong (Central), Hong Kong
246.30
2
London - Central (West End), United Kingdom
219.81
3
Tokyo (Marunouchi Otemachi), Japan
197.27
4
Beijing (CBD), China
184.95
5
New Delhi (Connaught Place - CBD), India
183.30
6
Beijing (Finance Street), China
179.57
7
Hong Kong (West Kowloon), Hong Kong
174.13
8
Moscow, Russian Federation
172.82
9
London - Central (City), United Kingdom
131.76
10
São Paulo, Brazil
130.07
11
Mumbai (Bandra Kurla Complex), India
122.19
12
Rio de Janeiro, Brazil
121.40
13
Paris Ile-de-France, France
119.78
14
Sydney, Australia
119.04
15
Shanghai (Pudong), China
116.36
16
New York (Midtown Manhattan), U.S.
114.30
17
Shanghai (Puxi), China
108.25
18
Geneva, Switzerland
105.28
19
Singapore, Singapore
104.66
20
Perth, Australia
96.91
21
Caracas, Venezuela
95.68
22
Washington, DC (Downtown), U.S.
94.51
23
Dubai, United Arab Emirates
92.56
24
Seoul (CBD), South Korea
91.28
25
Mumbai (Nariman Point - CBD), India
90.80
26
San Francisco (Downtown), U.S.
90.00
27
Zurich, Switzerland
87.98
28
Boston (Downtown), U.S.
87.50
29
Istanbul, Turkey
82.78
30
Brisbane, Australia
79.04
31
Luxembourg City, Luxembourg
77.94
32
Los Angeles (Suburban), U.S.
76.84
33
Stockholm, Sweden
76.35
34
New York (Downtown Manhattan), U.S.
74.93
35
Seoul (Yeouido), South Korea
74.27
36
Milan, Italy
74.21
37
Guangzhou, China
72.88
38
Bogota, Colombia
70.76
39
Calgary (Downtown), Canada
70.59
40
Aberdeen, United Kingdom
70.20
41
Manchester, United Kingdom
69.80
42
Edinburgh, United Kingdom
69.02
43
Taipei, Taiwan
68.57
44
Birmingham, United Kingdom
68.36
45
Toronto (Downtown), Canada
68.00
46
Vancouver (Downtown), Canada
67.20
47
Frankfurt am Main, Germany
66.31
48
Bristol, United Kingdom
65.10
49
Oslo, Norway
64.91
50
Glasgow, United Kingdom
64.31

Source: CBRE Global Research and Consulting

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; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our Web site at www.cbre.com.

CBRE Offices Global

CBRE Offices Worldwide