Improvements in the Global Office Rent Cycle this quarter were divergent, with the most broad-based growth occurring in the U.S., particularly in markets with connections to energy, technology and healthcare industries such as Houston, Seattle and Dallas. With slowly improving employment fundamentals and a recovering housing industry, U.S. markets are anticipated to continue along a gradual path towards recovery.
Elsewhere in the Americas, rental growth in São Paulo and Mexico City cooled as a result of supply conditions. Demand from local and international occupiers in Mexico City remained healthy and the outlook is positive. Meanwhile, the outlook is stable for São Paulo. Toronto will also remain stable in the near term until a large influx of supply comes to market during 2014, 2015 and 2016.
Considerably weak demand was recorded in EMEA markets such as Paris, London and Frankfurt, where an absence of large transactions was noted. However, for many EMEA markets, such as London and Paris, the shortage of prime space and low construction levels have served to maintain rents levels while occupiers remain reluctant to commit to the costs of relocation and expansion. The outlook for most European markets is one of stability due to shortages of prime space and occupier reluctance to expand until a more substantial economic recovery takes hold across the region.
Prime office rental growth across Asia Pacific was relatively flat during the quarter, with only slight increases in markets such as Bangkok, Manila, Taipei and Tokyo. Most occupiers in Asia Pacific, such as those in Hong Kong, Mumbai, Sydney and Shanghai, remained cautious and focused on renewal, consolidation and cost containment strategies.
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