by Brianna Crandall — July 14, 2017 — Hong Kong (Central) and London’s West End remain the two most expensive office locations in the world, according to global commercial real estate services and investment firm CBRE’s Research division’s latest annual Global Prime Office Occupancy Costs report.
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 ($214 per sq. ft.), New York (Midtown) ($203 per sq. ft.), Hong Kong (West Kowloon) ($190 per sq. ft.) and Beijing (Central Business District (CBD)) ($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 overall, 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, although 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 United States.
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 and 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 $300 per sq. ft.
The most expensive market in the global ranking from the Pacific Region was Sydney ($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 USA, 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 $203 per sq. ft. New York Midtown South took the eighth spot on the list with a prime office occupancy cost of $156 per sq. ft.
Sao Paulo was the most expensive market in Latin America, posting an office occupancy cost of $69 per sq. ft. and ranking as the 35th most expensive market globally.
The Global Prime Office Occupancy Costs report is available from CBRE.
Top 10
Most Expensive Markets
(In US$ 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 |
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.
