Hong Kong (Central) and London’s West End Again Top Prime Office Occupancy Costs, According to CBRE

Los Angeles | June 19, 2017

New York’s Midtown Ranked Third Among Global Markets

Hong Kong (Central) and London’s West End topped the list of prime office occupancy costs again, according to CBRE Research’s latest annual Global Prime Office Occupancy Costs report.

Hong Kong (Central) and London’s West End remained the two most expensive office locations in the world. Hong Kong’s (Central) overall prime occupancy costs of US$303 per sq. ft. per year topped the “most expensive” list, followed by London’s West End (US$214 per sq. ft.), New York (Midtown) (US$203 per sq. ft.), Hong Kong (West Kowloon) (US$190 per sq. ft.) and Beijing (Central Business District (CBD)) (US$183 per sq. ft.).

“The global top-10 list reflects the ongoing strength of global gateway cities in attracting and maintaining a successful occupier base,” said Richard Barkham, global chief economist, CBRE.

Global prime office occupancy costs—which reflect rent, plus local taxes and service charges for the highest-quality, “prime” office properties—rose 1.9 percent year-over-year, with the Americas up 3.6 percent, EMEA up 0.8 percent and Asia Pacific up 1.2 percent.

Durban (South Africa) had the highest increase in occupancy cost overall, though Stockholm (Sweden) registered some of the fastest growth in Europe, along with Palma de Mallorca (Spain), Belfast (U.K.) and Amsterdam (Netherlands). In Asia Pacific, Shanghai (Puxi) in China had the highest growth in occupancy cost, followed by Guangzhou, Bangalore and Shanghai (Pudong). Buenos Aires showed the biggest increase in the Americas overall, while suburban Denver, suburban Houston and New York Midtown South saw the largest occupancy-cost increases in the U.S.

CBRE tracks occupancy costs for prime office space in 121 markets around the globe. Of the top 50 “most expensive” markets, 21 were in Asia Pacific, 16 were in EMEA and 13 were in the Americas.

Europe Middle East & Africa (EMEA)

In EMEA, Durban (South Africa) had the highest increase in occupancy cost overall, though Stockholm (Sweden) registered some of the fastest growth in Europe. Palma de Mallorca (Spain), Belfast (U.K.) and Amsterdam (Netherlands) also showed double-digit growth, with Lyon (France) and Berlin (Germany) not far behind.

In London’s West End, the fall in occupancy costs is largely due to a fall in rents triggered by more subdued demand, particularly amongst financial occupiers who have become less willing to pay the high rents prevailing in London’s premier market.

Occupier efforts to reduce occupancy costs due to the ongoing strength of the Swiss franc relative to the euro have resulted in falls in Swiss markets, including Geneva and Zurich.

London (City) was pushed out of the top-10 most expensive markets to 11th place, despite prime office costs rising by 2.9%.

Asia Pacific

In Asia Pacific, Shanghai (Puxi) in China had the highest growth in occupancy cost, followed by Guangzhou, Bangalore and Shanghai (Pudong).

In Singapore, occupancy costs continued to fall, thanks to increased supply of office stock and weak levels of inflation.

Asia Pacific was home to seven of the top 10 most expensive markets—Hong Kong (Central), Hong Kong (West Kowloon), Beijing (CBD), Beijing (Finance Street), Tokyo (Marunouchi/Otemachi), New Delhi (Connaught Place - CBD), and Shanghai (Pudong).

Hong Kong (Central) is the only market in the world with a prime occupancy cost exceeding US$300 per sq. ft.

The most expensive market in the global ranking from the Pacific Region was Sydney (US$97 per sq. ft.), in 19th place.

Americas

In the Americas, suburban Denver, suburban Houston and New York Midtown South saw the largest occupancy-cost increases in the U.S., but Buenos Aires showed the biggest increase in the Americas overall.

New York Midtown, number three on the global list, remained the most expensive market in the Americas, with a prime office occupancy cost of US$203 per sq. ft. New York Midtown South took the eighth spot on the list with a prime office occupancy cost of US$156 per sq. ft.

Sao Paulo was the most expensive market in Latin America, posting an office occupancy cost of US$69 per sq. ft. and ranking as the 35th most expensive market globally.

Top 10
Most Expensive Markets

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

Rank	Market	Occupancy Cost

1	Hong Kong (Central), Hong Kong	302.51
2	London (West End), United Kingdom	213.85
3	New York (Midtown Manhattan), U.S.	202.79
4	Hong Kong (West Kowloon), Hong Kong	190.02
5	Beijing (CBD), China	183.10
6	Beijing (Finance Street), China	170.29
7	Tokyo (Marunouchi/Otemachi), Japan	161.76
8	New York (Midtown-South Manhattan), U.S.	156.19
9	New Delhi (Connaught Place - CBD), India	153.89
10	Shanghai (Pudong), China	133.82

Largest Annual Changes
Occupancy Costs

(In local currency and measure)

Top 5 Increases

Rank	Market	% Change

1	Durban, South Africa	21.2
2	Buenos Aires, Argentina	20.0
3	Stockholm, Sweden	18.8
4	Denver (Suburban), U.S.	17.2
5	Palma de Mallorca, Spain	16.5

Top 5 Decreases

Rank	Market	% Change

1	Jakarta, Indonesia	-19.6
2	Moscow, Russian Federation	-18.0
3	Geneva, Switzerland	-9.8
4	Hanoi, Vietnam	-7.4
5	Calgary (Downtown), Canada	-6.7

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

Notes

1. The Global Prime Office Occupancy Costs report is a survey of office occupancy costs for prime office space in 121 cities worldwide.

2. The latest survey provides data on office rents and occupancy costs as of March 31, 2017.

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 (robert.mcgrath@cbre.com).

Top 50 Most Expensive Office Markets

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

Rank (Q1 2017)	Market	Occupancy Cost
1	Hong Kong (Central), Hong Kong	302.51
2	London (West End), United Kingdom	213.85
3	New York (Midtown Manhattan), U.S.	202.79
4	Hong Kong (West Kowloon), Hong Kong	190.02
5	Beijing (CBD), China	183.10
6	Beijing (Finance Street), China	170.29
7	Tokyo (Marunouchi/Otemachi), Japan	161.76
8	New York (Midtown-South Manhattan), U.S.	156.19
9	New Delhi (Connaught Place - CBD), India	153.89
10	Shanghai (Pudong), China	133.82
11	London (City), United Kingdom	130.17
12	Moscow, Russian Federation	118.70
13	Shanghai (Puxi), China	113.02
14	San Francisco (Downtown), U.S.	112.71
15	Dubai, United Arab Emirates	106.17
16	Boston (Downtown), U.S.	102.50
17	Seoul (CBD), South Korea	100.62
18	Paris, France	100.55
19	Sydney, Australia	97.17
20	Mumbai (Bandra Kurla Complex), India	96.91
21	San Francisco (Peninsula), U.S.	96.84
22	New York (Downtown Manhattan), U.S.	91.18
23	Washington, D.C. (Downtown), U.S.	90.15
24	Los Angeles (Suburban), U.S.	89.57
25	Seoul (Yeouido), South Korea	89.27
26	Shenzhen, China	86.65
27	Singapore, Singapore	85.02
28	Geneva, Switzerland	80.76
29	Dublin, Ireland	80.59
30	Stockholm, Sweden	80.34
31	Istanbul, Turkey	75.06
32	Zurich, Switzerland	73.33
33	Mumbai (Nariman Point - CBD), India	73.10
34	Guangzhou, China	69.57
35	São Paulo, Brazil	69.47
36	Taipei, Taiwan	67.92
37	Manchester, United Kingdom	64.72
38	Tel Aviv, Israel	63.70
39	Ho Chi Minh City, Vietnam	63.61
40	Houston (Downtown), U.S.	63.10
41	Birmingham, United Kingdom	62.53
42	Milan, Italy	61.70
43	Seattle (Downtown), U.S.	61.12
44	Edinburgh, United Kingdom	59.40
45	Helsinki, Finland	59.07
46	Seattle (Suburban), U.S.	58.35
47	Perth, Australia	57.60
48	Chicago (Downtown), U.S.	57.51
49	Brisbane, Australia	57.03
50	Jakarta, Indonesia	57.02

Source: CBRE Research, Q1 2017.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

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