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Global Office Property Values Continue To Rise, Accentuating Investor Demand For Prime Assets

Global Office Rents Remain Stable

Los Angeles, May 23, 2013 – Global office property values continued to improve, rising 0.9% during Q1 2013, while global office rents were stable for the period, according to CBRE Group, Inc.

“Office property’s appreciation during the quarter accentuates the strong risk-adjusted returns offered by commercial real estate. The availability of such returns, in contrast to lower-yielding investment alternatives, continues to create intense competition for prime assets,” said Dr. Raymond Torto, CBRE Global Chief Economist. “Limited supply and keen demand for prime space in the best locations have supported global office rent levels even in a global environment still constrained by chronic economic headwinds. As economic and property fundamentals continue to recover steadily the outlook for rents is for stability or, over time, moderate growth.”

CBRE Global Capital Value Indices

  • The CBRE Office Capital Value Index continued its upward trajectory, rising 0.9% on the quarter and 2.5% year-over-year. Global office capital markets are outshining the global leasing markets due to several dynamics, including the migration of capital from other asset classes to commercial real estate seeking attractive risk-adjusted returns in a low interest rate environment.
  • The Americas Office Capital Value Index (dominated by the U.S. region) had the strongest performance of all regional indices, growing 1.5% in Q1 2013 and 5.9% year-over-year. While demand for prime property in U.S. gateway markets (such as New York, Washington D.C. and San Francisco) remains robust, given the aggressive pricing for such properties, investors have been more willing to invest in secondary markets such as Seattle, Houston, Dallas, Austin and Denver, which offer relatively higher yields than the core markets. While this shift is small and has yet to materially impact cap rates and pricing trends for assets in non-gateway markets, the initial movement in capital is worth noting.
  • Q1 2013 marked the second consecutive quarter of positive growth for the EMEA Office Capital Value Index, which grew by 0.6% quarter-over-quarter. Relative to a year ago, capital values are down 0.2% in EMEA.
  • Asia Pacific’s Office Capital Value Index grew by 0.7% in the quarter and is the only regional index to have surpassed its pre-recession peak, expanding by 4.5% since Q2 2008. Key markets in Greater China and New Zealand continued to record rises in capital values during Q1 2013. Relative to a year ago, capital vales are up 2.3% in Asia Pacific.


CBRE Global Office Rent Indices

  • The Global Office Rent Index has steadily improved over the last five quarters thanks to moderate growth in the Americas and stability in Asia Pacific and EMEA. The Index was flat for Q1 2013 and up 0.8% over the past year. However, it still stands 9.5% below its pre-recession peak.
  • In Q1 2013, the Americas Office Rent Index also plateaued as the region persevered through a persistently bumpy and slow economic recovery, weighed down by fiscal austerity and the effects of continued recession in Europe. 

- Markets with exposure to the defense and government sector have exhibited softer leasing activity, while those with links to the high-tech and energy sectors, such as San Francisco and Dallas are bright spots. Positive factors for a continued, yet modest Americas recovery include the U.S. housing rebound, a commercial construction cycle near its trough and expected gradual employment gains.

  • Asia Pacific’s Office Rent Index has seen little variation in the last six quarters, and its regional index stands 14.8% below its pre-recession peak. Q1 2013’s modest quarterly growth of 0.05% is an improvement to last quarter, which saw a -0.1% quarterly decline.

- While Grade A rents in most markets were relatively flat during the period, Bangkok was as a bright spot, with rents recording a gain of 2.7% quarter-on-quarter -- the seventh successive quarterly increase -- amid strong demand from international companies across various industries. New Delhi’s central business district also recorded further gains in rents as well.

  • The EMEA’s Office Rent Index was also flat, while hovering 8.9% below its pre-recession peak. EMEA’s demand is constrained by cost containment and consolidation. Additionally, to a smaller extent, some occupiers have sought urban environments (to fulfill staff preferences) thus causing a recentralization where some occupiers are moving to core CBD’s from decentralized areas.


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.

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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 and investment firm (in terms of 2012 revenue).  The Company has approximately 37,000 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 website at

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