Asia-Pacific found with costliest office spaces

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Business World

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

http://www.bworldonline.com/content.php?section=Property&title=Asia-Pacific-found-with-costliest-office-spaces&id=73545

Orion Support Incorporated (OSI)

Dear Rick,

Following up from my initial request to you for support in finding a new office location for our company, Orion Support Incorporated.   Well, we moved in to the LTA Building on Perea Street, fifty meters or so from Paseo de Roxas this weekend, only a 4 minute walk to AmCham and under excellent terms.

While I think you assigned both Morgan Mcgilvray and Sherdil Rana to support our original request; as you know, Morgan was very tied up with his wife giving birth during the period we identified this location and negotiated with the landlord, Mr. Mike Arroyo. Yes, the former First Gentleman. But in my short interaction with Morgan, I can see that he is a solid, young professional.

With regards to Sherdil, I want to tell you that with 35+ years of interviewing hundreds and hundreds of individuals, I was impressed with his professionalism, focused support and “can-do” attitude  from the point of identifying our potential office space, and through the negotiation stages prior to the signing of our 6 year contract.  I was impressed with his considered opinions, insightfulness with regards to Philippine business culture and his sage advice related to our strategy in the negotiation process.  Sherdil was able to negotiate a rental rate per square meter about 150 – 200 pesos less than the going rate in this area, and with only a 7% increase after 24 months. Add to that, he secured for us three parking slots at no additional cost, two months security deposit versus the standard three, and two months advance rent to be applied to the front end of our contract versus the back end as is the case in most rental contracts. And, he got the landlord to repaint the entire office with three coats of mildew resistant paint at their expense.   But best of all, we were given a 6 year lease, with only having to give two months notice and forfeit only our two month security deposit to move out anytime with no additional penalty!

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