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Hong Kong-Central tops world office space market


Published:   |   Updated: July 12, 2013 at 11:45 AM

Hong Kong-Central remains the priciest place to put an office, according to CBRE Global Research and Consulting's semi-annual Prime Office Occupancy Costs survey for the first quarter of 2013.

Hong Kong-Central's overall occupancy costs of $235.23 per square foot a year topped the "most expensive" list for the third consecutive time. All rates are in U.S. currency equivalents.

London's West End followed with total occupancy costs of $222.58. Beijing's Finance Street, Beijing's Jianguomen Central Business District and New Delhi's Connaught Place rounded out the top five.

Other Asia-Pacific markets in the top 10 include Hong Kong-West Kowloon (sixth) and Tokyo (eighth).

New York's Midtown Manhattan, at 10th, returned to the top 10 markets for the first time since early 2012, joined by Moscow, at seventh and the City of London, ninth.

The CBRE report did not list any occupancy costs rate for the Tampa Bay Metropolitan Area, which includes Pasco County; Class A office rent, however, only averaged $22.85 per square foot a year for first quarter 2013.

Miami rents for the same prime areas averaged $36.49 for the same period.

Globally, occupancy costs rose by a scant 1.4 percent on a year-over-year basis as modest growth in the Americas and Asia Pacific was partly offset by a slight decrease in Europe, still in recession, the report said.

The modest global average increase, however, masked significant increases in markets like Jakarta, Indonesia, and suburban Houston, which posted increases of 38.9 percent and 21.2 percent, respectively. Boston followed with a 15.4 percent increase.

This trend continued increases first seen in 2011 after three recession years of falling rates.

"While the pace of occupancy cost growth globally has slowed, limited supply of prime space in key core business centers has fueled continuous upward movement of occupancy costs," said Raymond Torto, CBRE's global chief economist. "The most expensive office markets often attract the regional headquarters of large multinational firms that require a prime location in a prestigious building with access to major global and regional transit routes."

CBRE tracks occupancy costs for prime office space in 127 markets around the globe.
Of the top 50 "most expensive" markets, 21 are in Asia-Pacific; 18 are in Europe, the Middle East and Africa; and 11 are in the Americas.

Singapore experienced the largest annual decrease worldwide, down 16.3 percent, in part a result of increases in both new supply and the availability of lower-priced secondary space.

The bulk of the rental decline occurred in early 2012, with only minimal rental corrections in the second half of 2012 and in Q1 2013.

The most expensive market in the global ranking from the Pacific Region was Sydney, at $119.23 per square foot, which came in at 13th most expensive.

U.S. energy market centers, such as Denver and Houston, and high-tech areas also saw rising costs, including Downtown San Francisco and Seattle's downtown.

Across most of the fast-growing energy and high-tech markets, new office space supply is limited, given the requirement of a high level of pre-leasing before any new construction can be financed, according to CBRE economists.

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