by Brianna Crandall — November 18, 2013—Strong demand from niche financial and technology sectors is driving up the cost of office space in many cities around the globe, but a new analysis by global real estate services firm Jones Lang LaSalle reveals that 12 premier office districts have been the biggest beneficiaries of the trend, witnessing higher competition by companies for space and driving rent prices to new highs.
The map shows the location of the world’s most expensive office areas.(Click on image to enlarge)
JLL’s new list of the “World’s Most Expensive Office Areas” reflects a variety of global and regional economic trends and highlights the key factors companies consider when seeking premier office space. All 12 of the office districts are within the world’s most internationally connected and easily accessible cities, which the firm says are home to the greatest number of top global corporate headquarters, the world’s top talent, and the highest net worth individuals.
Despite the upheavals in financial markets in recent years, the research points to the financial sector as the primary demand-driver in these top locations. A general lack of available space adds an aura of exclusivity in these supply-constrained areas, luring emerging companies in other sectors, as well as retail, hospitality and tourism attractions.
JLL Director of Research Jeremy Kelly says the same set of Global Cities will continue to dominate the list in the years to come, although the order will change with sector-driver market conditions and the continued rise of the technology and mobile sectors. For example, Silicon Valley will continue to climb the list as tech-driven demand continues to push up rental rates.
“With premium rents in the CBDs of a number of U.S. cities now increasing, we can expect to see additional U.S. markets ranking among the Most Expensive over the next 24 months,” said Kelly.
Market dynamics can also have the converse effect, however. “Tokyo was the most expensive market for office space in the world for many years,” Kelly said, “but it was hit hard by the global financial crisis and has been surpassed by other Asian power cities.”
According to JLL, the World’s Most Expensive Office Areas for 2013 (in terms of the local currency as well as in U.S. dollars/USD) are:
- St. James’s, LONDON: GBP 125 per sq. ft. per year ($194 per sq. ft. per year)
- Central, HONG KONG: HKD 105 per sq. ft. per month ($162 per sq. ft. per year)
- Finance Street, BEIJING: RMB 750 per sq m per month ($137 per sq. ft. per year)
- Rue du Rhne, GENEVA: CHF 1,150 per sq m per year ($116 per sq. ft. per year)
- Menlo Park, SILICON VALLEY, CA: ($111 per sq. ft. per year)
- Kremlin Area, MOSCOW: $1,150 per sq m per year ($107 per sq. ft. per year)
- Fifth Avenue, MIDTOWN MANHATTAN, NY: ($104 per sq. ft. per year)
- Raffles Place/Marina Bay, SINGAPORE: SGD 11 per sq. ft. per month ($103 per sq. ft. per year)
- Golden Triangle, Champs Elysées area, PARIS: EUR 800 per sq m per year ($99 per sq. ft. per year)
- Marunouchi, TOKYO: JPY 28,600 per tsubo per month ($98 per sq. ft. per year)
- Uraniastrasse and Paradeplatz area, ZURICH: CHF 900 per sq m per year ($91 per sq. ft. per year)
- Lujiazui, SHANGHAI: RMB 16 per sq m per day ($87 per sq. ft. per year)
JLL notes that the “12 Most Expensive” ranking features quoted rents for the most rarefied part of each of these cities: premium office space in top sub-markets, and that rents will be quite different from the market as a whole. Also, only one office location has been included per city. The firm adds that the list does not include several “emerging” and “frontier” cities, where severe supply issues create exceptionally high rents, such as Rio de Janeiro and Lagos, and that taking exceptionally high incentive levels into account made Sydney land just outside the Top 12.
For further commentary on Jones Lang LaSalle’s “Most Expensive Office Areas” from CEO Colin Dyer, visit his LinkedIn Influencer blog.
