Asia-Pacific found with costliest office spaces
July 18, 2013
ASIA-PACIFIC sites accounted for many of the 10 most expensive office markets worldwide in a first-quarter study released late last month by international property consultancy firm CBRE, Inc.
The same publication, “Prime Office Occupancy Costs: Office Costs Rising Slowly,” also ranked Manila fifth in terms of increase in prime office occupancy cost — a measure that counts various factors like rent, service charges and taxes.
“Despite a lackluster global economic environment, prime office occupancy costs increased 1.4% globally year-over-year,” according to the study’s executive summary.
“The rate of growth was slower than in CBRE’s previous study in Q3 2012 which saw occupancy costs rise 2.1% year-over-year.”
It added that, out of the 127 markets tracked in the latest report, occupancy costs increased in 71 sites, declined in 34 others and stayed the same in 22.
“Of the 10 most expensive office markets, six were located in Asia-Pacific, three were in EMEA (Europe, the Middle East and Africa) and one was in the Americas,” the study’s summary read.
A table of the 10 most expensive sites enumerated these markets as:
• Hong Kong (Central) with occupancy cost of $235.23 per square feet per annum (/sq. ft./annum);
• London-Central (West End), $222.58/sq. ft./annum;
• Beijing (Finance Street), $194.07/sq. ft./annum;
• Beijing (Jianguomen Central Business District, or CBD), $187.06/sq. ft./annum;
• New Delhi (Connaught Place CBD), $178.96/sq. ft./annum;
• Hong Kong (West Kowloon), $173.90/sq. ft./annum;
• Moscow, $165.05/sq. ft./annum;
• Tokyo (Marunouchi/Otemachi), $161.16/sq. ft./annum;
• London-Central, $132.94/sq. ft./annum; and
• New York (Midtown Manhattan), $120.65/sq. ft./annum.
A table showed Manila with prime rent of P990 per square meter per month and occupancy cost of $35.95/sq. ft./annum.
“Of the top 50 most expensive office markets worldwide, 21 were located in Asia-Pacific, 18 were in EMEA and 11 were in the Americas,” the summary read, citing “lack of prime office space” as “a key factor in driving up office occupancy costs across Asia-Pacific.”
In terms of region, the Americas still saw the biggest annual growth in prime office occupancy costs at 2.8%, followed by Asia-Pacific with 2.1%.
“A significant lack of Class A office space across Asia-Pacific continued to drive up prime office occupancy costs in key markets,” the summary explained.
A ranking of the 10 markets with the biggest increases placed the Philippines fifth with a 14.9% increase — the same rate as that of downtown Houston.
Markets with faster growth were Jakarta with 38.9%; suburban Houston, 21.2%; and downtown Boston, 15.4%.
Those with slower growth were identified as Beijing (Finance Street), 14.7%; downtown San Francisco, 14.3%; downtown Calgary, 12.0%; suburban Seattle, 10.5%; and Hong Kong (West Kowloon), 9.5%.
“New supply in key global core markets has been limited, driving up occupancy cost despite the tepid global economic environment,” CBRE said.
Sought for comment, CBRE Philippines said via e-mail: “Growing office demand amid vacancy rates below 5% in major CBDs and a strong economic performance has pushed prime occupancy rates up year-on-year by as much as 14%. However, it is still worthy to note that, despite the increase, the Philippines remains one of the most cost-effective destinations for outsourcing companies.” — C. H. C. Venzon