The global economy endured a weaker-than-expected first half of 2016, due mainly to volatility in China and Asia at the beginning of the year, and to a period of substantially slower U.S. growth. Oxford Economics expects improvement in the second half, leading to annual growth of 2.2% in 2016.
The Global Office Rental Index was essentially flat in Q2 2016, registering quarter-over-quarter growth of 0.1%—a decline from the previous quarter’s 0.6%. Growth remained stable in Asia Pacific but slowed in EMEA and the Americas.
- In line with expectations for an H2 2016 acceleration in growth, U.S. gross asking rents registered year-over-year growth of 6.2% in Q2 2016—the fastest rate of the current cycle. In Canada, average national office rental rates fell as new supply and rising vacancy prompted landlords to offer more inducements to tenants.
- In EMEA, rents stalled in Q2 2016, marking no change from the first quarter of the year. The static development pipeline, solid regional demand momentum and consequent likelihood of further vacancy declines mean rental growth should pick up in the coming quarters.
In Asia Pacific, rental growth edged up by 0.5%, quarter-over-quarter, despite an ongoing moderation in demand. Leasing momentum has been slow this year—and corporates more cautious—due to economic uncertainty.
Global Office Rent Cycle, Q2 2016