This article is from the Australian Property Journal archive
CENTRAL Hong Kong remains the world’s highest-priced office market, as tech and media hubs around the world saw prime rents rise.
CBRE’s latest Global Prime Office Rents survey showed Hong Kong’s prime rental rate of US$269.26 per sq ft was clearly the highest, and was followed by Beijing’s Finance Street with $174.07 and Hong Kong’s West Kowloon with $163.57.
Global prime office rents were up 2% year-on-year, led by the Americas with 3.4% growth, followed by EMEA with 1.3% and the Asia Pacific with 1.2%, slightly below 2016 levels. Of the world’s 50 most expensive markets, 20 were in the Asia Pacific, 18 in EMEA and 12 in the Americas.
Asian markets dominated the top ten most expensive – Beijing’s CBD was fifth with $151.87, Tokyo’s Marunouchi/Otemachi in seventh with $132.09, Pudong in Shanghai at eighth with $120.11, and New Delhi’s Connaught Place–CBD rounded out the top ten $110.85.
Ada Choi, director of research, CBRE Asia Pacific, said prime office rents are growing firmly at the top end of the market, reflecting strong demand for premium space across Asia Pacific.
“We are seeing prime office rental growth outstripping the overall market performance,” she said.
In 17th place with $84, Sydney was the most expensive Pacific market. Bangkok saw the strongest growth in the region with 18.2%, whilst domestic demand drove growth in China’s Tier 1 cities, including Shanghai and Guangzhou.
Also in the top ten were Midtown Manhattan in New York in fourth with $153.50; London’s West End at sixth with $136.38, and Midtown-South Manhattan ninth with $113.53.
Richard Barkham, CBRE global chief economist, said prime rents showed the strongest growth in information technology and media hubs, including Stockholm, Amsterdam, Tel Aviv, New York and Seattle.
“Co-working operators have been active in acquiring new space, particularly targeting tenants in tech industries,” he said.
Stockholm tied with Bangkok at the top of the 121 markets surveyed for growth with 18.2% and Amsterdam returned a strong 12.5%.
New York’s Midtown-South recorded annual growth of 11.7%, and Downtown Manhattan and Seattle (Downtown) completed the ten fastest-growing prime office markets with 9.5% and 9.3% rental growth respectively.
“In the US, economic activity picked up in Q2, benefitted by a weaker dollar and easier financial conditions compared with 2016. Corporate earnings have been strong and have propelled global stock markets, which is generally good for prime office rents,” Barkham said.
Three quarters of the Americas’ markets in positive territory, driven by tightening markets and strong demand. Rents were up in 18 out of 23 US markets covered in the CBRE survey, but region also had the largest proportion of declining markets with 21%, due to continued weakness in oil and gas-reliant markets such as Houston.
Six of the 10 fastest-growing markets were in EMEA, including Stockholm, Belfast with 14.3%, and Amsterdam. Also among the fastest growing markets was Palma de Mallorca at 12.5%, and Leeds and Lyon with 11.1% each.
Australian Property Journal
