Global MarketView - Inicio · Global MarketView: Office Occupancy Costs Three of the top five most expensive markets are located in Asia Pacific. Tokyo’s Inner Central district

May 2009

Global MarketView

Office Occupancy Costs

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© 2009, CB Richard Ellis, Inc.

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Introduction

Global Economies

The foundation of the global economy has been tested to a degree not seen

since the Great Depression. What began as a U.S. housing crisis quickly be-

came a worldwide financial crisis. Tightening credit markets made it difficult for

businesses and individuals to obtain financing, ultimately curtailing investment.

Uncertainty in the banking sector led to significant government intervention.

Meanwhile, as employers continue to cut payrolls, consumers have been cau-

tious in their spending, fueling a drop in demand for goods in every region of

the world. As a result, industrial production worldwide has contracted.

Europe has been hit hard during the recession. The Euro Zone’s economy

declined at a 6.2% annualized rate during Q4 2008. This decline was led

by Ireland—previously one of the region’s fastest-growing economies—and

Germany, the region’s largest economy. In fact, Ireland has been among the

world’s hardest-hit countries during this downturn, with its economy—affected by

falling exports and a crashing housing sector—contracting at a 25.7% annualized

rate in Q4 2008. Germany was particularly affected by the massive decline in

global trade, and its export-led economy declined at an 8.2% annualized rate

during Q4 2008.

It appears that the effects of the financial crisis in the U.S. are beginning to

wane. Credit markets are slowly showing signs of thawing, making it easier for

businesses and consumers to obtain loans. Home prices in the U.S. continue

to fall, albeit at a slower pace. After a decade of overbuilding, it will take more

time for the excess housing inventory to be absorbed. The U.S. posted large

back-to-back declines in GDP during Q4 2008 and Q1 2009; however, there

are signs that the worst of the recession is behind us. Consumer spending,

which accounts for nearly 70% of GDP, increased 2.2% in Q1 2009. This in-

crease, although modest, is welcome news for the struggling global economy.

Asia’s most significant problem during the past two quarters has been the sub-

stantial drop in global trade. Japan’s economy, the region’s largest, contracted

at an annualized rate of 14.4% in Q4 2008. Japan’s export industries were

hit particularly hard by the huge drop in global trade. China, the region’s

other major economy, has also experienced a slowdown. China’s once blazing

economy posted a growth rate of 6.1% in Q1 2009. While China is not techni-

cally in a recession, this is a significant slowdown for a country that has grown

at double digit rates for years.

The Most Expensive Become Less ExpensiveThe financial crisis has taken a toll on the world’s office markets. As such, the

most expensive markets are considerably less expensive than they were at the

time of our last report six months ago. Financial service providers have been

responsible for driving up the rents for prime office space in recent years, par-

ticularly in the dominant global financial centers, so it comes as little surprise

that these markets have seen some of the biggest decreases in the cost of office

space over the last twelve months.

Figure 1 – GDP Growth: Select Countries

Country Latest Q/Q Percentage Change Annualized

Australia -2.1

China 6.1 y/y

Euro Zone -6.2

Germany -8.2

Hong Kong* -2.0

Japan -14.4

Singapore -19.7

South Korea -20.8

United Kingdom -7.4

United States -6.1

Source: Economist Intelligence Unit*Non-Annualized Q/Q Figure

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Three of the top five most expensive markets are located in Asia Pacific.

Tokyo’s Inner Central district tops the list, with an office occupancy cost of

$183.62 per sq. ft. Hong Kong’s Central CBD and Tokyo’s Outer Central

district are also included in the top five. Asia Pacific was home to 13 of the

50 most expensive cities.

EMEA, led by London’s West End (LWE) has the largest number of markets

on the top 50 list. LWE was previously the most expensive market in the

world, but now comes in at number two. As expected, the office market in

London—one of the world’s most important financial centers—has been hit

hard. The exchange rate of the pound sterling to the U.S. dollar further pulled

down the cost, in dollar terms, of occupying office space in London.

Global 50 Index—Most Expensive(ranked by occupancy cost in US$/SF/annum)

1 Tokyo, (Inner Central), Japan 183.62

2 London (West End), England 172.62

3 Moscow, Russia 170.24

4 Hong Kong (Central CBD) 150.42

5 Tokyo (Outer Central), Japan 149.58

6 Mumbai, India 131.04

7 Dubai, United Arab Emirates 122.52

8 Paris, France 114.89

9 London (City), England 103.50

10 Dublin, Ireland 93.56

11 Abu Dhabi, United Arab Emirates 91.21

12 New Delhi, India 86.94

13 Paris La Defense, France 86.04

14 Hong Kong (Citywide) 84.47

15 Singapore, Singapore 82.79

16 Milan, Italy 80.89

17 Luxembourg City, Luxembourg 77.58

18 Zurich, Switzerland 76.69

19 Geneva, Switzerland 73.42

20 Ho Chi Minh City, Vietnam 70.27

21 New York Midtown, U.S. 68.63

22 Frankfurt am Main, Germany 68.30

23 Edinburgh, Scotland 66.61

24 Madrid, Spain 66.47

25 Shanghai (Pudong), China 65.22

26 Rome, Italy 64.93

27 Manchester, England 63.75

28 Birmingham, England 63.03

29 Leeds, England 60.88

30 Perth, Australia 59.15

31 Glasgow, Scotland 58.73

32 Stockholm, Sweden 58.59

33 São Paulo, Brazil 57.74

34 Bristol, England 57.30

35 Rio de Janeiro, Brazil 57.26

36 Shanghai (Puxi), China 57.01

37 Munich, Germany 56.00

38 Oslo, Norway 54.75

39 Calgary, Canada (CBD) 54.57

40 Seoul, South Korea 54.18

41 Warsaw, Poland 54.16

42 Prague, Czech Republic 53.23

43 Aberdeen, Scotland 53.00

44 New York Downtown, U.S. 52.92

45 Los Angeles (sub), U.S. 52.83

46 Toronto, Canada (CBD) 51.82

47 Washington, D.C. (CBD), U.S. 51.77

48 Athens, Greece 51.62

49 Brussels, Belgium 50.43

50 Beijing, China 49.44

Change in Local Currency Unit Compared to U.S.$March 2008 – March 2009

September 2008 – March 2009March 2008 – September 2008

-30

-10

0

10

-20

-40

% Ch

ange

Canada(Dollar)

China(Yuan)

Europe(Euro)

India(Rupee)

Japan(Yen)

Australia(Dollar)

South Korea(Won)

Switzerland(Franc)

Britain(Pound)

Source: XE.com Quick Currency Converter

Figure 2

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Global 50 Index—Fastest ChangingPrime Office Space Occupancy Cost Local Currency & Measure (ranked by 12-month % change increases)

1 Singapore, Singapore -34.4

2 New York Midtown, U.S. -31.5

3 Hong Kong (Central CBD) -29.9

4 Boston (sub), U.S. -29.7

5 Hong Kong (Citywide) -28.5

6 Moscow, Russia -26.7

7 Oslo, Norway -25.5

8 New Delhi, India -23.6

9 Calgary, Canada (sub) -21.5

10 Tokyo, (Inner Central), Japan -21.2

11 Mumbai, India -20.8

12 Tel Aviv, Israel -20.2

13 London (West End), England -20.0

14 San Francisco, U.S. -20.0

15 Brisbane, Australia -19.8

16 Tokyo (Outer Central), Japan -19.3

17 Ho Chi Minh City, Vietnam -18.1

18 Madrid, Spain -17.7

19 Seattle (CBD), U.S. -17.6

20 Manila, Philippines -17.4

21 Orange County, U.S. -16.5

22 Athens, Greece -16.3

23 Warsaw, Poland -15.4

24 Barcelona, Spain -15.3

25 Sydney (Core), Australia -15.1

26 Los Angeles (sub), U.S. -14.8

27 Malaga, Spain -14.7

28 Houston, U.S. -13.9

29 Shanghai (Pudong), China -13.1

30 Seattle (sub), U.S. -12.9

31 Birmingham, England -12.9

32 London (City), England -12.5

33 Dublin, Ireland -11.6

34 Oakland, U.S. -10.1

35 Miami (sub), U.S. -9.7

Top 35 Decreases

1 Marseille, France 30.4

2 Perth, Australia 22.2

3 Santo Domingo, Dominican Republic 21.7

4 Durban, South Africa 18.2

5 Charlotte, U.S. 14.2

6 Prague, Czech Republic 13.6

7 Milan, Italy 13.3

8 Cape Town (Claremont), South Africa 13.0

9 Johannesburg (Sandton), South Africa 12.0

10 Christchurch, New Zealand 11.4

11 Vancouver, Canada (sub) 11.3

12 Leeds, England 10.4

13 London, Canada 9.9

14 Lima, Peru 9.7

15 Rome, Italy 9.1

Top 15 Increases

North America is led by Midtown New York, which posted an office occu-

pancy cost of $68.63 per sq. ft. While office occupancy costs in Midtown New

York are high for North America, it ranked just 21st globally. Meanwhile,

São Paulo, Brazil, posted Latin America’s highest office occupancy costs at

$57.74 per sq. ft. and is ranked 33rd globally.

Office occupancy costs when converted into U.S. dollars are driven by both

the local market dynamics of supply and demand, as well as currency

changes. The trend toward a strengthening U.S. dollar began in spring

2008 and has continued into 2009, with most major currencies weakening

against the dollar. The recent strength in the Japanese yen partially explains

Tokyo’s new position as the most expensive market. Figure 2 shows how

currencies have fluctuated over the past 12 months. With global economic

uncertainty leading to continued volatility in the currency markets, real

estate values in U.S. dollar terms will continue to be dramatically affected

by currency markets.

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The Fastest Changing Office Markets

The tide has turned

Office markets worldwide are no longer becoming more expensive. The

year-over-year change in office occupancy costs for the 173 markets CBRE

Global Research and Consulting monitors dropped by 2.8% worldwide (on

a simple unweighted average basis). This compares to an overall increase

of more than 8% in the last report. Thirty-four cities registered double-digit

percentage-point drops in office occupancy costs year-over-year, as it is

clear the weak economy has taken a toll on the world’s office markets1.

Some markets did record increases in costs over the last 12 months but

these markets—such as Charlotte, Marseille and Perth—are now very

much the exception rather than the rule. Generally, such increases are

either due to exceptional local market conditions, such as the completion

of a top quality new building in a market where none was available previ-

ously, or simply that occupancy costs remain above the level of a year

ago despite the fact that they are now falling. Such situations illustrate the

uneven way in which the economic downturn is affecting different markets

across the globe.

1 Changes referred to in this section are based on local measures of rent and are thus unaffected by currency fluctuations.

Singapore led the world with the largest year-over-year decrease in office

occupancy costs, falling 34.4% from levels a year ago. For the Asia Pacific

region, the office markets that experienced the largest decreases also

tended to be the regions with major financial centers. Hong Kong, Tokyo

and Mumbai posted large drops in office occupancy costs.

The story is similar in North America. New York led the way, with a de-

cline of 31.5% year-over-year, while Boston’s suburban market decreased

nearly 30%. Nine markets in North America posted double-digit declines.

Meanwhile, Latin America held up stronger than the rest of the world, with

only three cities posting small negative growth rates, the worst of which was

Mexico City, with a 5.6% decrease.

The EMEA region had 12 cities with double-digit declines in office occu-

pancy costs. Moscow was the worst-performing office market in the region,

followed closely by Oslo. Office occupancy costs in London’s West End,

previously the most expensive market in our report, fell 20%.

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Asia Pacific Regional Snapshot

Asia

Q1 2009 saw Asia fall deeper into

recession, as industrial production

slumped and the unemployment rate rose across many key markets.

However, a number of economic indicators released at the end of March

suggested that the worst may be over, as the rate of decline in exports,

industrial output and the purchasing managers’ indices began to ease.

Corporate occupiers continued to re-evaluate cost-saving options, includ-

ing restructuring existing leases, downsizing office space requirements and

relocating to more affordable locations within or around the CBD. As a

result, there was a broad-based reduction in demand for office space in Q1

2009, which led to an increase in the office vacancy rate in 15 out of the

17 markets tracked. Cities experiencing the most severe spikes in vacancy

quarter-over-quarter included Taipei, New Delhi and Ho Chi Minh City,

which surged by 620 bps, 530 bps and 400 bps, respectively.

The period saw occupiers of premium office buildings become more resis-

tant to high asking rents. All Asian office markets remained in the downward

phase of the rent cycle, with the exception of Seoul, which hovered on the

edge of correction. Prime office rents continued to fall by a range of 1%

to 20% from the previous quarter. On a year-over-year basis, Singapore

recorded the region’s worst rental contraction, of 34%, followed by Hong

Kong, which was down 32% over the same period.

Pacific: Australia & New Zealand GDP

The GDP growth rate for Australia in 2008 was 0.6% and is expected to de-

crease to approximately -1.0% by the end of 2009. The Australian economy

may go into a recessionary period following the release of Q1 2009 GDP

results in June 2009. In the past year, Australian incomes grew at record

rates, and profits continued to reach all-time highs; however, most spot

commodity prices are now back at 2004 levels. While Australia came late

to the global crisis, China’s slowdown means that Australia may soon be a

full-fledged participant.

Leasing Activity Eases

Tenant demand eased across most of the Australian office markets in 2008,

with several cities posting negative net absorption for the year. In 2008,

net absorption reached over 121,600 sq. m. (1.3 million sq. ft.) across all

CBDs, down from 611,500 sq. m. (6.6 million sq. ft.) in 2007. A further

reduction in demand is expected in 2009, with most markets forecast to

record negative net absorption in 2009. Looking forward, new supply is ex-

pected to remain low, as difficulty in obtaining financing and/or large pre-

commitments has put many projects on hold indefinitely. Over the course of

2008, Australian CBD vacancy increased to about 5.0% and is forecast to

increase again in 2009, to approximately 8.7%. Similar to Australia, New

Zealand’s occupier market is softening, with falling or negative net absorp-

tion in most markets. Vacancies remain low, but are on the rise.

Key Market Snapshots

Tokyo: Market sentiment in Tokyo continued to weaken in the opening

months of 2009, as the economy deteriorated and corporate downsizing

increased. Grade A rents experienced further downward pressure, declin-

ing 12.1% quarter-over-quarter to 45,250 JPY per tsubo (US$12.88 per

sq. ft.) per month, as tenants sought to reduce office costs. However, there

remained a gap between the rents being offered by owners and the rents

potential tenants were prepared to pay—a trend most evident in prime

buildings with high rents where less-flexible landlords found it difficult to

sign up new tenants.

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Singapore: Singapore office rents continued to decline through Q1 2009

against the backdrop of weakening demand and an uncertain market

outlook. The sharp correction in prime and Grade A rents that commenced

in Q4 2008 persisted into Q1 2009. Prime rents stood at S$10.50 per sq.

ft. (US$6.91 per sq. ft.) per month in the first quarter, a decrease of 18.6%

from the end of 2008 and 34.4% from the same period a year ago. With

decreasing demand for office space, vacancy rates rose between January

and March, but still remained at a manageable level of 2.9% at the end of

Q1 2009.

Hong Kong: Downsizing and cost-cutting continued to impact leasing

activity in the Hong Kong office market during Q1 2009. While the Chinese

New Year holiday ensured that the first part of the quarter remained relatively

quiet, activity picked up in subsequent weeks as relocation plans that had

been put on hold were reactivated. Rents in the Central CBD dropped 20.1%

quarter-over-quarter to an average of HK$84.06 per sq. ft. (US$10.85 per

sq. ft.) per month. Rents in the other major districts also continued to fall,

albeit by a slower rate of decline. Vacancy in the Central CBD increased to

5.4%, while most other districts also recorded modest increases.

Sydney CBD: In H2 2008, there was a contraction in the Sydney CBD

occupier market, with net absorption reaching negative 40,400 sq. m.

(negative 434,900 sq. ft.), culminating in negative 16,600 sq. m. (negative

178,700 sq. ft.) for full-year 2008. Net absorption is expected to ease further

in 2009, as firms continue to focus on the bottom line, given the financial

and economic downturn in global markets. Prime rents in the Sydney CBD

Core decreased by 3.2% from the same time last year. Incentives continued

to increase over Q1 2009, resulting in an 8.4% decrease in effective rents

over the same period and a 19.3% drop compared to the same time last

year.

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Prime Net Face Rents used for Australian rents, Prime Gross Effective rents used for Occupancy costs* All Asia markets are reported on a net floor basis, including all occupancy expenses^ CBRE Research Seoul revised the office property basket in Q1 2008 accordingly# Prime Office Districts reflect Central CBD, Peripheral Central, Wan Chai, Causeway Bay, Tsim Sha Tsui, Kowloon East and Island East

Asia Pacific: Office Rents and Occupancy Costs

Rent—LocaL cuRRency/MeasuRetotaL occupancy cost—

LocaL cuRRency/MeasuRe*totaL occupancy cost us$/annuM* totaL occupancy cost euRos [€]/annuM teRMs

Current per local measure% change

12 months Current per local measure% change

12 monthsCurrent

per sq. ft.Current

per sq. m.% change

12 monthsCurrent

per sq. ft.Current

per sq. m.% change

12 monthsTypical lease term (yrs.)

Typical rent free (months)

Adelaide, Australia A$ 324 sq.m. p.a. 7.8 A$ 365 sq.m. p.a. 6.7 US$ 22.54 US$ 243 -22.4 € 17.29 € 186 -5.9 5 9

Auckland, New Zealand NZ$ 348 sq.m. p.a. 3.3 NZ$ 429 sq.m. p.a. -3.1 21.23 229 -34.4 16.30 175 -20.3 9 9.5

Bangalore, India Rs 85 sq. ft. p.m. -10.5 Rs 146.93 sq. ft. p.m. -9.2 34.46 371 -29.5 26.33 283 -14.5 3+3 1

Bangkok, Thailand Baht 710 sq. m. p.m. -4.4 Baht 710 sq. m. p.m. -4.4 22.32 240 -15.5 16.85 181 -5.2 3 1-2

Beijing, China RMB 190.72 sq. m. p.m. -4.8 RMB 303.03 sq. m. p.m. -4.6 49.44 532 -2.1 37.32 402 16.5 2-3 1-3

Brisbane, Australia A$ 583 sq.m. p.a. -10.9 A$ 599 sq.m. p.a. -19.8 36.96 398 -41.6 28.35 305 -29.3 5 8.3

Canberra, Australia A$ 362 sq.m. p.a. 0.0 A$ 395 sq.m. p.a. -7.2 24.35 262 -32.5 18.68 201 -18.1 5 5.0

Christchurch, New Zealand NZ$ 253 sq.m. p.a. 12.6 NZ$ 318 sq.m. p.a. 11.4 15.74 169 -24.6 12.09 130 -8.5 5 0.0

Guangzhou, China RMB 97.58 sq. m. p.m. -10.4 RMB 173.92 sq. m. p.m. -8.6 28.37 305 -6.2 21.42 231 11.7 2-4 1-3

Ho Chi Minh City, Vietnam US$ 57.30 sq. m. p.m. -18.1 US$ 63.03 sq. m. p.m. -18.1 70.27 756 -18.1 50.02 538 -17.0 2 1

Hong Kong (Citywide)# HK$ 45.39 sq. ft. p.m. -31.3 HK$ 54.55 sq. ft. p.m. -28.5 84.47 909 -28.2 63.57 684 -14.7 3 or 6 3-4

Hong Kong (Central CBD) HK$ 84.06 sq. ft. p.m. -32.2 HK$ 97.14 sq. ft. p.m. -29.9 150.42 1,619 -29.7 113.21 1,219 -16.4 3 or 6 3-4

Jakarta, Indonesia IDR 81,720 sq. m. p.m. 3.6 IDR 136,130 sq. m. p.m. 3.2 13.16 142 -17.7 9.93 107 -2.0 3 1

Manila, Philippines Php 1,000 sq. m. p.m. -20.0 Php 1,190 sq. m. p.m. -17.4 27.53 296 -28.4 20.78 224 -14.3 3 1

Melbourne, Australia A$ 420 sq.m. p.a. 4.7 A$ 450 sq.m. p.a. -1.2 27.73 298 -28.1 21.27 229 -12.9 10 18.9

Mumbai (CBD), India Rs 350 sq. ft. p.m. -22.2 Rs 558.67 sq. ft. p.m. -20.8 131.04 1,411 -38.5 100.10 1,077 -25.4 3+3+3 1

New Delhi (CBD), India Rs 240 sq. ft. p.m. -25.0 Rs 370.67 sq. ft. p.m. -23.6 86.94 936 -40.7 66.42 715 -28.0 3+3+3 1

Perth, Australia A$ 809 sq.m. p.a. 22.0 A$ 959 sq.m. p.a. 22.2 59.15 637 -11.2 45.37 488 7.7 5 0.0

Seoul (CBD), South Korea ^ KRW 27,634 sq. m. p.m. 5.1 KRW 66,690 sq. m. p.m. 3.7 54.18 583 -25.2 40.89 440 -11.0 2-3 1-2

Shanghai (Pudong), China RMB 244.05 sq. m. p.m. -14.1 RMB 399.76 sq. m. p.m. -13.1 65.22 702 -4.7 49.24 530 13.5 2-3 1-2

Shanghai (Puxi), China RMB 216.36 sq. m. p.m. -9.8 RMB 349.47 sq. m. p.m. -8.6 57.01 614 -6.9 43.04 463 10.8 2-3 1-2

Singapore, Singapore S$ 10.50 sq. ft. p.m. -34.4 S$ 10.50 sq. ft. p.m. -34.4 82.79 891 -40.7 62.43 672 -29.2 3 1

Sydney (Core), Australia A$ 728 sq.m. p.a. -3.2 A$687 sq.m. p.a. -15.1 42.35 456 -38.2 32.49 350 -25.1 8 22.5

Taipei, Taiwan NT 2,487 ping p.m. 3.7 NT 4,211 ping p.m. 3.4 41.98 452 -7.4 31.69 341 10.2 3-5 1-3

Tokyo (Inner Central), Japan ¥ 45,250 tsubo p.m. -23.3 ¥ 53,812 tsubo p.m. -21.2 183.62 1,977 -20.4 138.63 1,492 -5.1 5 1-3

Tokyo (Outer Central), Japan ¥ 35,750 tsubo p.m. -21.9 ¥ 43,837 tsubo p.m. -19.3 149.58 1,610 -18.5 112.93 1,216 -2.9 5 1-3

Wellington, New Zealand NZ$ 353 sq.m. p.a. 6.5 NZ$ 458 sq.m. p.a. 3.9 22.66 244 -29.6 17.40 187 -14.6 6 2.0

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Latin America Regional Snapshot Latin America continues to feel the ef-

fects of the global recession, with GDP

growth in 2009 expected to be only

half of 2008 levels. Markets are seek-

ing financing from both traditional and non-traditional sources for stimulus

spending to restore investor confidence. Several Latin American countries

are better positioned to withstand an economic downturn, given the pros-

perity they enjoyed over the past few years. These countries include Brazil,

Colombia, Mexico, Peru and Uruguay, all of which have ample reserves

and enough foreign investment to finance their current small fiscal deficits.

For the most part, Latin America is still experiencing low vacancy rates and

has benefited from continued stable local demand for real estate. While

there has been some retrenching among select multi-national firms, overall

there has not been a loss of confidence in the region. It is expected that

vacancy rates will continue to inch up slowly, but an implosion in real estate

is not likely.

Similar to the rest of the global market, Latin America continues to struggle

with a lack of capital flow. Investors remain interested in the region, but

cannot secure financing for real estate. Cap rates continue to climb, and

there have generally been no distressed sales in the market. Among all

commercial real estate segments, office, industrial and retail remain fun-

damentally strong.

Office demand remains weak, but we have yet to see any increase in sublet

activity; for now, firms are still retaining excess space, while others have

cancelled new and, in some cases, existing leases. Latin America is coming

off record lows in vacancy rates, which will continue to increase marginally

on the heels of a few new projects scheduled to come online. Continued

softness in rents in select markets and properties is expected in the region.

In Latin America’s top office markets, the drop in demand has been more

moderate.


Buenos Aires, Argentina: Following three years of strong demand

and soaring lease rates, the Buenos Aires office market is now showing a

reverse trend. Class A vacancy jumped to 6.4%, and the average Class A

lease rate decreased nearly 10% during Q1 2009 to $31 per sq. m. While

proposed projects and developments in the early construction stages have

been indefinitely suspended, more than 300,000 sq. m. of new inventory

is actively under construction. There is still demand for quality office space,

however, and with increasing property choices and tenant-friendly laws,

tenants now have the upper hand in negotiations for both new and existing

lease agreements.

Mexico City, Mexico: Despite Mexico’s close ties to the U.S. economy,

Mexico City’s office market has not been thrown off balance by the eco-

nomic crisis. Class A vacancy increased slightly to 5.9% during Q1 2009,

and average lease rates are, for the most part, stable, while prime lease

rates have decreased since last year. More than 800,000 sq. m. of office

space is currently under construction and is anticipated to come on the

market over the next four years. Approximately 190,000 sq. m. of that con-

struction will be completed during 2009, and is expected to put downward

pressure on lease rates.

Lima, Peru: Lima’s office development has still not caught up with the

strong demand fueled by the extraordinary economic growth Peru has

experienced since 2005. In light of the global economic crisis, demand

for office space in Lima has slowed somewhat, but continues to support

substantial pre-leases for projects slated for completion this year. Vacancy

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in existing buildings is under 2% and is expected to increase moderately

over time with the addition of new inventory. Lease rates in existing Class A

buildings have continued to increase, while the historically higher rates for

pre-leases in current projects are leveling out.

Santiago, Chile: After four years of unprecedented growth, the Santiago

office market is showing a marked decrease in activity. As tenant cost con-

tainment weakens demand, active construction projects are being slowed in

order to delay completions and subsequently curb dramatic drops in lease

rates. The Class A vacancy rate increased slightly to 1.8% during Q1 2009.

Although there is some downward pressure on prime lease rates due to

increased competition from pending new supply, the average lease rate for

Class A space has remained flat for the time being.

São Paulo, Brazil: The São Paulo office market continues to benefit from

Brazil’s strong economic fundamentals. Although demand has weakened

somewhat, and the market has recorded negative absorption for the first

time in several years, its lease rates have remained stable. Developers are

postponing proposed projects, which will curtail potential oversupply and

an associated drop in lease rates. However, moderate decreases in lease

rates are expected as tenants reduce their space requirements and new

construction projects come online, driving availability upward.

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* In Venezuela, foreign exchange is government controlled at a fixed exchange rate of VEF 2.15/USD (introduced on January 1, 2008; previously VEB 2,150/USD until year end 2007). Market rents reflect perceived exchange rate value that may differ from the fixed exchange rate. Therefore, USD and Euro values for the Caracas market are not applicable in the above table.** Includes electricity

Rent—LocaL cuRRency/MeasuRetotaL occupancy cost—LocaL cuRRency/MeasuRe

totaL occupancy cost us$/annuM totaL occupancy cost euRos [€]/annuM teRMs



12 monthsCurrent

per sq. ft.Current

per sq. m.% change

12 monthsCurrent

per sq. ft.Current

per sq. m.% change

12 monthsTypical lease

term (yrs.)Typical rent

free (months)

Latin America and The Caribbean: Office Rents and Occupancy Costs

Bogota, Colombia COP 63,000 sq.m. p.m. 1.6 COP 69,500 sq.m. p.m. 1.5 US$ 30.46 US$ 328 -26.9 € 22.99 € 247 -12.6 3-5 1-2

Buenos Aires, Argentina USD 39.00 sq.m. p.m. 11.4 USD 48.61 sq.m. p.m. 8.1 14.34 154 -70.9 10.82 117 -65.2 3 1-3

Caracas, Venezuela VEF 237 sq.m. p.m.* 5.3 VEF 248 sq.m. p.m. 6.7 n/a n/a n/a n/a n/a n/a 1-3 1-3

Lima, Peru USD 17.00 sq.m. p.m. 9.7 USD 19.70 sq.m. p.m. 9.7 21.40 230 9.7 16.15 174 31.2 3-5 1

Mexico City, Mexico USD 30.00 sq.m. p.m. -6.3 USD 37.37 sq.m. p.m. -5.6 39.31 423 -5.6 29.67 319 12.9 3-5 1-2

Montevideo, Uruguay USD 18.00 sq.m. p.m. 0.0 USD 23.33 sq.m. p.m. 0.0 26.01 280 0.0 19.63 211 19.6 2-5 None

Nassau, Bahamas USD 30.00 sq.ft. p.a. 0.0 USD 39.00 sq.ft. p.a. ** 0.0 39.00 420 0.0 29.43 317 19.6 3-5 1-3

Panama City, Panama USD 24.00 sq.m. p.m. 2.1 USD 27.20 sq.m. p.m. 3.9 30.32 326 3.9 22.88 246 24.3 3-5 1-2

Quito, Ecuador USD 12.00 sq.m. p.m. 0.0 USD 16.50 sq.m. p.m. 3.1 18.39 198 3.1 13.88 149 23.3 2-5 1

Rio de Janeiro, Brazil BRL 100.00 sq.m. p.m. 0.0 BRL 119.00 sq.m. p.m. 1.7 57.26 616 -23.2 43.22 465 -8.2 5 1-2

San Jose, Costa Rica USD 25.00 sq.m. p.m. 8.7 USD 27.50 sq.m. p.m. 7.8 30.66 330 7.8 23.14 249 29.0 3-5 1-3

San Juan, Puerto Rico USD 20.00 sq.ft. p.a. -4.8 USD 30.59 sq.ft. p.a. 0.0 30.59 329 0.0 23.09 248 19.6 5 2-3

Santiago, Chile UF 0.64 sq.m. p.m. -4.5 UF 0.75 sq.m. p.m. -2.6 30.10 324 -22.9 22.72 245 -7.6 3-5 1-2

Santo Domingo, Dominican Republic USD 25.00 sq.m. p.m. 19.0 USD 28.00 sq.m. p.m. 21.7 31.21 336 21.7 23.56 254 45.6 3-5 1

São Paulo, Brazil BRL 100.00 sq.m. p.m. 5.3 BRL 120.00 sq.m. p.m. 7.1 57.74 622 -19.1 43.59 469 -3.3 5 2-3

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North America Regional Snapshot

United States

The U.S. economy weakened dra-

matically during the last two quarters,

contracting 6.3% and 6.1%, respectively. The U.S. has not experienced

economic contraction of that magnitude since the 1950s. However, it

appears the economic situation may be showing signs of slowing its free

fall. After precipitous declines in Q3 and Q4 2008, consumer spending

actually rose a modest 2.2% during Q1 2009. The stock market, typically

a forward-looking indicator, has rallied, shrugging off recent bad news.

However, bright spots in the economy are few, and the market remains

vulnerable, as unemployment continues to increase rapidly. It is unlikely

that the U.S. economy will experience any meaningful economic growth

before Q4 2009.

The weakness in the economy has dampened demand for office space. In

Q1 2009, the U.S. experienced negative absorption. During the last two

quarters, the U.S. office market experienced a 130-bps increase in vacancy.

Employment levels and ultimately office demand often lag the broader

economy. With unemployment rising and firms reluctant to resume hiring,

we can expect the office market in the U.S. to deteriorate further.

Canada

When the global economic crisis first erupted, the focus in Canada was

on the manufacturing and automobile sectors in the provinces of Ontario

and Quebec, which bore the brunt of the job losses. Unlike in the U.S. and

Europe, the Finance, Insurance and Real Estate (FIRE) sector was relatively

unscathed initially; however, Q1 2009 job losses in the FIRE and energy

sectors in the West started to mount.

The overall national vacancy rate, at 7.5%, has increased 80 bps from Q4

2008 and a cumulative 120 bps from Q3 2008. The downtown national

vacancy rate, at 5.8%, has increased 90 bps from Q4 2008 and a cumula-

tive 110 bps from Q3 2008. Calgary, Edmonton and Vancouver experi-

enced the largest overall increases this quarter. The jumps in Calgary and

Vancouver were primarily due to increasing sublet space, while Edmonton’s

vacancy rate increase was primarily due to the addition of direct space in

the suburban market.

Overall national net absorption in Q1 2009 was negative 2.4 million sq.

ft., of which negative 1.8 million sq. ft. was in the downtown markets. The

majority of negative absorption occurred in Toronto and Calgary, with

negative 1.1 million sq. ft. and negative 907,690 sq. ft., respectively.

There was only 771,557 sq. ft. of new office space added to the market na-

tionally in Q1 2009, all of which was in the suburban markets. By the end of

2009, 8.4 million sq. ft. of new supply is expected to come online, 5.0 million

sq. ft. of which will be in the downtown markets. The extent of new supply ad-

ditions, combined with low demand due to the recession, will prompt vacancy

rates to increase and put downward pressure on rental rates.


Toronto: In Q1 2009, the Province of Ontario and the Greater Toronto

Area (GTA) experienced the lion’s share of Canada’s job losses, with key

office-using industries such as Finance, Insurance and Real Estate (FIRE)

being hit the hardest. Accordingly, the GTA posted negative 1.1 million sq.

ft. of absorption, the most negative absorption posted in a quarter since Q2

2003. The drop in demand caused the overall vacancy rate to soar 90 bps

to 7.7% and the Central Class A vacancy rate jumped 70 bps to 5.2%. The

source of the spike was a surge in both direct and sublet space. With nearly

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3.5 million sq. ft. of new supply expected to come online in the Central

market by the end of 2009, the vacancy rate is likely to climb and rental

rates are expected to fall.

Calgary: The economic slowdown and sluggish energy sector have taken

a toll on the Calgary office market. Overall vacancy, which was the lowest

in the country at 4.7% in Q3 2008, jumped 340 bps to 8.1% in Q1 2009,

and the Downtown Class A vacancy rate increased 160 bps to 3.7% over

the same period. The downtown Calgary market remained tight; however,

that market is experiencing an influx of discounted sublet space that is pull-

ing rental rates down. In the downtown market, sublet space represented

47.0% of all vacant space, compared to 24.3% nationally, whereas 60.4%

of downtown Class A vacant space is sublet space. With this shift in the

market, and the 5.3 million sq. ft. of new space currently under construction

downtown, the vacancy rate is expected to continue to rise with rental rates

decreasing accordingly.

Boston: Boston had more than 1.5 million sq. ft. of negative absorption

over the past two quarters. Vacancy in Q1 2009 was 12.3%, an increase of

130 bps from the previous quarter. The weakness in the financial industry

has severely weakened Boston’s office market, which is now experiencing

rent deflation.

Charlotte: Charlotte’s office market weakened dramatically over the past

two quarters, as the financial crisis hit this important financial center.

Vacancy rates increased more than 250 bps to 15.2% from the previous

quarter. Although rental rates are still higher than a year ago, rents began

to fall in Q1 2009. Rents were pushed down by negative absorption and

historically high levels of new construction.

Chicago: Demand for office space was flat in Q4 2008 and then dropped

off in Q1 2009. In Q1 2009, Chicago experienced negative absorption of

nearly 1.4 million sq. ft. The corresponding vacancy rate was 16.4%, an

increase of 150 bps over the past two quarters.

New York City: Vacancy in the city was 7.4% in Q1 2009, an increase of

60 bps from the previous quarter. The financial crisis is weighing heavily on

New York City’s large financial sector, which in turn is affecting demand for

the city’s office space. The city has experienced negative absorption for five

consecutive quarters.

San Francisco: San Francisco experienced more than 1.2 million sq. ft. of

negative absorption over the past two quarters. Vacancy in Q1 2009 was

12%, an increase of 230 bps from the previous quarter. The weakness in

the financial industry has severely weakened San Francisco’s office market,

which is now experiencing rent deflation.

Stamford, CT: Stamford’s office market continues to experience positive

absorption, making that market stand out among the nation’s financial

centers. Vacancy in Q1 2009 was 10.7%, a decrease of 10 bps from the

previous quarter. Although the weakness in the financial sector has not

yet negatively affected Stamford’s office market, it is forecast to weaken

dramatically in the coming quarters.

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Rent—LocaL cuRRency/MeasuRe totaL occupancy cost us$/annuM totaL occupancy cost euRos [€]/annuM


12 monthsCurrent

per sq. ft.Current

per sq. m.% change

12 monthsCurrent

per sq. ft.Current

per sq. m.% change

12 months

Unless otherwise indicated, all data reflect office space in the central commercial district. The term “sub” means suburban and is used primarily in North American markets. The local rent data is expressed in either gross or net terms depending on the prevailing local practice. Total occupancy costs (i.e., gross rents) are expressed in Euros and U.S. dollars for all markets. A complete explanation of the reported data appears at the end of this publication.One Euro [€] equals C$1.67 and U.S.$1.33. One U.S.$ equals C$1.26. U.S. Rents compiled by CBRE Econometric Advisors (formerly Torto Wheaton Research), an independent subsidiary of CB Richard Ellis.

United States and Canada: Office Rents and Occupancy Costs

Albuquerque, U.S. US$ 22.10 sq.ft. p.a. -2.1 US$ 22.10 US$ 238 -2.1 € 16.68 € 179 16.5

Atlanta (CBD), U.S. US$ 21.29 sq.ft. p.a. -2.2 21.29 229 -2.2 16.07 173 16.5

Atlanta (sub), U.S. US$ 24.05 sq.ft. p.a. -1.6 24.05 259 -1.6 18.15 195 17.2

Austin, U.S. US$ 19.94 sq.ft. p.a. -3.9 28.31 305 -2.3 21.37 230 16.3

Baltimore, U.S. US$ 24.89 sq.ft. p.a. -5.8 24.89 268 -5.8 18.78 202 12.1

Boston (CBD), U.S. US$ 41.27 sq.ft. p.a. -9.0 41.27 444 -9.0 31.15 335 8.3

Boston (sub), U.S. US$ 27.53 sq.ft. p.a. -29.7 27.53 296 -29.7 20.78 224 -16.3

Calgary, Canada (CBD) C$ 68.80 sq.ft. p.a. 1.2 54.57 587 -17.7 41.20 443 -1.9

Calgary, Canada (sub) C$ 32.96 sq.ft. p.a. -21.5 26.14 281 -36.1 19.72 212 -24.0

Charlotte, U.S. US$ 23.27 sq.ft. p.a. 14.2 23.27 250 14.2 17.56 189 35.9

Chicago (CBD), U.S. US$ 24.56 sq.ft. p.a. -0.8 35.14 378 0.0 26.52 285 19.0

Chicago (sub), U.S. US$ 17.43 sq.ft. p.a. -1.0 24.83 267 -0.2 18.74 202 18.8

Cincinnati, U.S. US$ 14.14 sq.ft. p.a. -0.4 21.26 229 0.4 16.04 173 19.5

Cleveland, U.S. US$ 22.78 sq.ft. p.a. 6.2 22.78 245 6.2 17.19 185 26.4

Columbus, U.S. US$ 11.52 sq.ft. p.a. -4.2 14.28 154 -3.1 10.78 116 15.3

Dallas, U.S. US$ 23.71 sq.ft. p.a. 2.6 33.13 356 2.4 25.00 269 21.9

Denver, U.S. US$ 26.53 sq.ft. p.a. -2.4 26.53 285 -2.4 20.02 215 16.2

Detroit, U.S. US$ 22.25 sq.ft. p.a. -4.5 22.25 239 -4.5 16.79 181 13.7

Edison, U.S. US$ 24.36 sq.ft. p.a. 1.9 24.36 262 1.9 18.38 198 21.3

Edmonton, Canada C$ 53.22 sq.ft. p.a. 8.6 42.21 454 -11.6 31.85 343 5.2

Fort Lauderdale, U.S. US$ 20.04 sq.ft. p.a. -5.2 29.21 314 -3.1 22.04 237 15.3

Fort Worth, U.S. US$ 19.81 sq.ft. p.a. -1.7 19.81 213 -1.7 14.95 161 17.0

Halifax, Canada C$ 33.05 sq.ft. p.a. 6.2 26.22 282 -13.6 19.78 213 2.8

Hartford, U.S. US$ 21.42 sq.ft. p.a. 4.5 21.42 230 4.5 16.17 174 24.4

Honolulu, U.S. US$ 22.52 sq.ft. p.a. -2.5 30.92 333 -1.3 23.34 251 17.4

Houston, U.S. US$ 24.91 sq.ft. p.a. -13.9 24.91 268 -13.9 18.80 202 2.5

Indianapolis, U.S. US$ 19.29 sq.ft. p.a. -4.1 19.29 208 -4.1 14.56 157 14.2

Jacksonville, U.S. US$ 20.81 sq.ft. p.a. -2.7 20.81 224 -2.7 15.71 169 15.9

Kansas City, U.S. US$ 20.82 sq.ft. p.a. 2.0 20.82 224 2.0 15.71 169 21.4

Las Vegas, U.S. US$ 34.74 sq.ft. p.a. -0.6 34.74 374 -0.6 26.22 282 18.4

London, Canada C$ 26.72 sq.ft. p.a. 9.9 21.19 228 -10.6 15.99 172 6.4

Long Island, U.S. US$ 32.83 sq.ft. p.a. 1.5 32.83 353 1.5 24.78 267 20.9

Los Angeles (CBD), U.S. US$ 29.92 sq.ft. p.a. -2.0 29.92 322 -2.0 22.58 243 16.7

Los Angeles (sub), U.S. US$ 52.83 sq.ft. p.a. -14.8 52.83 568 -14.8 39.87 429 1.4

Memphis, U.S. US$ 20.02 sq.ft. p.a. -1.7 20.02 215 -1.7 15.11 163 17.0

Miami (CBD), U.S. US$ 44.50 sq.ft. p.a. -1.0 44.50 479 -1.0 33.58 361 17.8

Miami (sub), U.S. US$ 41.46 sq.ft. p.a. -9.7 41.46 446 -9.7 31.29 337 7.5

Minneapolis, U.S. US$ 16.68 sq.ft. p.a. -1.1 24.32 262 -0.2 18.35 197 18.8

Montreal, Canada (CBD) C$ 39.32 sq.ft. p.a. 4.7 31.19 336 -14.8 23.53 253 1.5

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Rent—LocaL cuRRency/MeasuRe totaL occupancy cost u.s.$/annuM totaL occupancy cost euRos [€] /annuM


12 monthsCurrent

per sq. ft.Current

per sq. m.% change

12 monthsCurrent

per sq. ft.Current

per sq. m.% change

12 months

Unless otherwise indicated, all data reflect office space in the central commercial district. The term “sub” means suburban and is used primarily in North American markets. The local rent data is expressed in either gross or net terms depending on the prevailing local practice. Total occupancy costs (i.e., gross rents) are expressed in Euros and U.S. dollars for all markets. A complete explanation of the reported data appears at the end of this publication.One Euro [€] equals C$1.67 and U.S.$1.33. One U.S.$ equals C$1.26. U.S. Rents compiled by CBRE Econometric Advisors (formerly Torto Wheaton Research), an independent subsidiary of CB Richard Ellis.

United States and Canada: Office Rents and Occupancy Costs

Montreal, Canada (sub) C$ 25.76 sq.ft. p.a. 0.7 US$ 20.43 US$ 220 -18.1 € 15.42 € 166 -2.4

Nashville, U.S. US$ 21.50 sq.ft. p.a. 1.8 21.50 231 1.8 16.23 175 21.1

New York Downtown, U.S. US$ 52.92 sq.ft. p.a. -8.0 52.92 569 -8.0 39.94 430 9.5

New York Midtown, U.S. US$ 68.63 sq.ft. p.a. -31.5 68.63 738 -31.5 51.80 557 -18.4

Newark, U.S. US$ 26.09 sq.ft. p.a. -2.2 26.09 281 -2.2 19.69 212 16.4

Oakland, U.S. US$ 30.41 sq.ft. p.a. -10.1 30.41 327 -10.1 22.95 247 7.0

Orange County, U.S. US$ 33.46 sq.ft. p.a. -16.5 33.46 360 -16.5 25.25 272 -0.6

Orlando, U.S. US$ 26.31 sq.ft. p.a. -7.5 26.31 283 -7.5 19.86 214 10.2

Ottawa, Canada C$ 46.86 sq.ft. p.a. 4.1 37.17 400 -15.3 28.04 302 0.9

Philadelphia, U.S. US$ 25.24 sq.ft. p.a. 0.5 35.22 379 0.9 26.58 286 20.1

Phoenix, U.S. US$ 28.23 sq.ft. p.a. -3.7 28.23 304 -3.7 21.31 229 14.6

Pittsburgh, U.S. US$ 22.56 sq.ft. p.a. -0.7 22.56 243 -0.7 17.03 183 18.2

Portland, U.S. US$ 26.99 sq.ft. p.a. 0.4 26.99 290 0.4 20.37 219 19.6

Raleigh, U.S. US$ 22.58 sq.ft. p.a. 2.3 22.58 243 2.3 17.04 183 21.8

Riverside, U.S. US$ 27.57 sq.ft. p.a. 7.0 27.57 297 7.0 20.81 224 27.4

Sacramento, U.S. US$ 29.26 sq.ft. p.a. -2.6 29.26 315 -2.6 22.08 238 15.9

Salt Lake City, U.S. US$ 25.34 sq.ft. p.a. 0.6 25.34 273 0.6 19.12 206 19.7

San Diego, U.S. US$ 38.27 sq.ft. p.a. -4.2 38.27 412 -4.2 28.88 311 14.0

San Francisco, U.S. US$ 39.40 sq.ft. p.a. -20.0 39.40 424 -20.0 29.74 320 -4.8

San Jose, U.S. US$ 42.37 sq.ft. p.a. -4.6 42.37 456 -4.6 31.98 344 13.5

Seattle (CBD), U.S. US$ 34.47 sq.ft. p.a. -17.6 34.47 371 -17.6 26.01 280 -2.0

Seattle (sub), U.S. US$ 34.57 sq.ft. p.a. -12.9 34.57 372 -12.9 26.09 281 3.7

St. Louis, U.S. US$ 22.78 sq.ft. p.a. 1.2 22.78 245 1.2 17.19 185 20.5

Stamford, U.S. US$ 41.87 sq.ft. p.a. 9.0 41.87 451 9.0 31.60 340 29.7

Tampa, U.S. US$ 26.36 sq.ft. p.a. 2.2 26.36 284 2.2 19.89 214 21.7

Toledo, U.S. US$ 18.81 sq.ft. p.a. -0.8 18.81 202 -0.8 14.20 153 18.0

Toronto, Canada (CBD) C$ 65.33 sq.ft. p.a. 2.0 51.82 558 -17.0 39.10 421 -1.2

Toronto, Canada (sub) C$ 30.41 sq.ft. p.a. 0.7 24.12 260 -18.1 18.20 196 -2.5

Tucson, U.S. US$ 23.97 sq.ft. p.a. -4.2 23.97 258 -4.2 18.09 195 14.0

Vancouver, Canada (CBD) C$ 57.33 sq.ft. p.a. 0.8 45.47 489 -18.0 34.31 369 -2.3

Vancouver, Canada (sub) C$ 37.03 sq.ft. p.a. 11.3 29.37 316 -9.5 22.16 238 7.8

Ventura, U.S. US$ 28.86 sq.ft. p.a. 1.2 28.86 311 1.2 21.78 234 20.5

Washington, D.C. (CBD), U.S. US$ 51.77 sq.ft. p.a. -0.1 51.77 557 -0.1 39.07 420 19.0

Washington, D.C. (sub), U.S. US$ 38.68 sq.ft. p.a. -2.1 38.68 416 -2.1 29.19 314 16.6

Waterloo Region, Canada C$ 23.98 sq.ft. p.a. -3.3 19.02 205 -21.3 14.35 154 -6.3

West Palm Beach, U.S. US$ 23.60 sq.ft. p.a. 0.1 38.07 410 0.8 28.73 309 20.0

Wilmington, U.S. US$ 22.80 sq.ft. p.a. -2.1 31.30 337 -1.1 23.62 254 17.7

Winnipeg, Canada C$ 29.49 sq.ft. p.a. 5.6 23.39 252 -14.1 17.65 190 2.3

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EMEA Regional Snapshot

In Europe, economic data and overall

market sentiment declined sharply dur-

ing the first few months of 2009. There

has been a dramatic fall in industrial

production since September 2008, which reflects the general downturn in

global trade and is now a key concern for many economies. Spain, Ireland and

the U.K. were already suffering from the effects of inflated levels of consumer

debt and falling asset prices, but the outlook for export-oriented economies

such as Germany has now also weakened markedly. Borrowing rates have

been reduced further in both the U.K. and continental Europe, and policy-

makers have begun to consider more unorthodox measures to stimulate their

economies. The major European economies are now expected to contract by

3 to 4% in 2009, and this has led to extreme caution regarding real estate

commitments. As a result, a weakening in leasing activity and rental levels has

intensified.

Take-up across Europe has been weak, and London and Madrid in particular

had very slow starts to 2009, with leasing activity substantially below historic

levels. Even in markets that fared relatively better, such as Paris and Frankfurt,

take-up was boosted by a small number of isolated large deals, with core

underlying demand clearly down. Vacancy rates are rising, due to weaker

demand, but also because of the significant amount of sublet space being

offered to the market.

Prime rents have held firm in some markets, but are under growing downward

pressure in several of the larger ones. The CB Richard Ellis Office Rent Index

for the EU-15 area fell by 3.4% in the quarter (4.1% year-over-year) and some

markets, including Madrid and London, saw decreases of more than 10% in Q1

2009. CEE (Central and Eastern Europe) markets also saw general downward

movement in rents. To secure and keep tenants, landlords in most markets are

becoming increasingly flexible regarding lease terms, offering a combination

of longer free-rent periods, shorter lease terms or coverage of fit-out costs.


Frankfurt: German industrial production is now expected to shrink by

approximately 14% in 2009. Business sentiment is at an all-time low and

deflation is a growing concern. Office take-up in Q1 2009 was artificially

high due to two large lettings. In general, market activity has weakened, as

occupiers are understandably cautious. There is increased interest in less

expensive periphery locations, such as Eschborn, which offer significant cost

savings.

London: The U.K. economy has suffered a rapid and severe downturn, with a

contraction of more than 3% forecast for 2009. However, there is speculation

that the rate of decline may be starting to ease. Ongoing economic uncer-

tainty continues to make occupiers reluctant to take on new leases, and as a

result, demand for office space has remained subdued. The vacancy rate has

increased sharply—now at nearly 10% in the City—and will rise further, as the

majority of space currently under construction is speculative.

Paris: While recent economic data for France has been better than other

European countries, the economy is still expected to shrink by nearly 3% in

2009, driven by a decline in production. Prime office rents continued to fall

(currently at €780 per sq. m. per annum), as demand weakens. Occupiers are

strongly focused on cost reduction, and some are requesting longer terms from

landlords in exchange for better conditions, particularly when breaks are due.

Madrid: The Madrid office market experienced a difficult start to 2009, with a

high level of demand-side risk affecting the market. The Spanish economy has

slowed significantly in the past year as a result of troubled financial markets

and slowing construction. Demand has fallen considerably, as occupiers refrain

from taking on unnecessary expense in the uncertain economic climate, and

prime rents have fallen 16% over the past year to €34 per sq. m. per month.

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12 monthsCurrent

per sq. ft.Current

per sq. m.% change12 months

Currentper sq. ft.

Currentper sq. m.

% change12 months

Typical lease term (yrs.)


Unless otherwise indicated, all data reflect office space in the central commercial district. The term “sub” means suburban and is used primarily in North American markets. The local rent data is expressed in either gross or net terms depending on the prevailing local practice. Total occupancy costs (i.e., gross rents) are expressed in local currency, Euros and U.S. dollars for all markets. A complete explanation of the reported data appears at the end of this publication.Local figures are based on local measurements. The standardized Euro occupancy costs account for differing values in net and gross measurements.

Europe, Middle East and Africa: Office Rents and Occupancy Costs

Aberdeen, Scotland £25.00 sq.ft.p.a. 4.2 £37.00 sq.ft.p.a. 1.4 US$ 53.00 US$ 571 -26.9 € 40.02 € 431 -12.6 10 8

Abu Dhabi, United Arab Emirates AED 310.00 sq.ft.p.a. 11.1 AED 335.00 sq.ft.p.a. 8.4 91.21 982 8.4 68.84 741 29.6 3 1-3

Amsterdam, Netherlands € 330.00 sq.m.p.a. 1.5 € 372.40 sq.m.p.a. 1.6 49.29 531 -15.0 37.20 400 1.6 5 14

Athens, Greece € 28.00 sq.m.p.m. -12.5 € 32.50 sq.m.p.m. -16.3 51.62 556 -30.0 38.96 419 -16.3 12 + 4 1

Barcelona, Spain € 23.50 sq.m.p.m. -16.1 € 27.50 sq.m.p.m. -15.3 45.64 491 -29.2 34.45 371 -15.3 3 +2 3-5

Belfast, Northern Ireland £14.00 sq.ft.p.a. 0.0 £22.50 sq.ft.p.a. 0.0 32.23 347 -27.9 24.33 262 -13.8 10 6

Berlin, Germany € 20.00 sq.m.p.m. -9.1 € 23.00 sq.m.p.m. -8.0 33.98 366 -23.1 25.64 276 -8.0 3-5 3-9

Birmingham, England £29.00 sq.ft.p.a. -10.8 £44.00 sq.ft.p.a. -12.9 63.03 678 -37.2 47.59 512 -24.9 10 24

Bratislava, Slovakia € 18.00 sq.m.p.m. 0.0 € 24.92 sq.m.p.m. 1.0 40.90 440 -15.5 30.87 332 1.0 5 3-6

Bristol, England £27.50 sq.ft.p.a. 0.0 £40.00 sq.ft.p.a. -2.4 57.30 617 -29.7 43.26 466 -15.9 10 18

Brussels, Belgium € 275.00 sq.m.p.a. -8.3 € 338.00 sq.m.p.a. -6.9 50.43 543 -22.1 38.06 410 -6.9 3/6/9 1/ year secured

Budapest, Hungary € 20.00 sq.m.p.m. -9.1 € 24.50 sq.m.p.m. -5.8 40.21 433 -21.2 30.35 327 -5.8 3-5 4-6

Cape Town (Claremont), South Africa R 130.00 sq.m.p.m. 13.0 R 130.00 sq.m.p.m. 13.0 15.21 164 -3.6 11.51 124 15.6 5-10 0

Copenhagen, Denmark DKr 1850.00 sq.m.p.a. 0.0 DKr 2275.00 sq.m.p.a. 1.1 44.24 476 -15.3 33.39 359 1.2 3-6 0

Dubai, United Arab Emirates AED 450.00 sq.ft.p.a. 0.0 AED 450.00 sq.ft.p.a. 0.0 122.52 1319 0.0 92.47 995 19.6 3 1-2

Dublin, Ireland € 592.00 sq.m.p.a. -12.0 € 760.00 sq.m.p.a. -11.6 93.56 1007 -26.1 70.61 760 -11.6 20 (5yr break) 24

Durban, South Africa R 130.00 sq.m.p.m. 18.2 R 130.00 sq.m.p.m. 18.2 15.21 164 0.8 11.51 124 20.8 5-10 0

Edinburgh, Scotland £29.00 sq.ft.p.a. 0.0 £46.50 sq.ft.p.a. 0.0 66.61 717 -27.9 50.29 541 -13.8 10 24

Frankfurt am Main, Germany € 38.00 sq.m.p.m. -2.6 € 43.00 sq.m.p.m. -1.1 68.30 735 -17.3 51.55 555 -1.1 5 + 5 3-9

Geneva, Switzerland SF 850.00 sq.m.p.a. 9.0 SF 900.00 sq.m.p.a. 7.8 73.42 790 -6.4 55.39 596 11.9 5 3

Glasgow, Scotland £27.50 sq.ft.p.a. 0.0 £41.00 sq.ft.p.a. 1.2 58.73 632 -27.0 44.34 477 -12.7 10 30

Gothenburg, Sweden SKr 2300.00 sq.m.p.a. 4.5 SKr 2685.00 sq.m.p.a. 4.1 33.62 362 -19.4 25.38 273 -3.6 3-5 0-3

Hamburg, Germany € 24.00 sq.m.p.m. 0.0 € 27.10 sq.m.p.m. 0.0 43.05 463 -16.4 32.49 350 0.0 5 + 5 5-6

Helsinki, Finland € 348.00 sq.m.p.a. -0.6 € 348.00 sq.m.p.a. -0.6 47.60 512 -16.9 35.92 387 -0.6 3 / 5 0

Jersey, England £28.00 sq.ft.p.a. 7.7 £32.75 sq.ft.p.a. 5.9 46.91 505 -23.7 35.42 381 -8.7 9 4

Johannesburg (Sandton), South Africa R 140.00 sq.m.p.m. 12.0 R 140.00 sq.m.p.m. 12.0 16.38 176 -4.5 12.39 133 14.5 5-10 0

Leeds, England £27.00 sq.ft.p.a. 8.0 £42.50 sq.ft.p.a. 10.4 60.88 655 -20.4 45.97 495 -4.8 10 24

Lille, France € 190.00 sq.m.p.a. 8.6 € 255.00 sq.m.p.a. 6.3 33.75 363 -11.2 25.47 274 6.3 3/6/9 3-6

Lisbon, Portugal € 20.50 sq.m.p.m. 0.0 € 23.75 sq.m.p.m. -3.1 38.55 415 -18.9 29.10 313 -3.1 5 3-6

Liverpool, England £20.00 sq.ft.p.a. -9.1 £31.50 sq.ft.p.a. -3.1 45.12 486 -30.1 34.07 367 -16.4 10 36

London (City), England £46.50 sq.ft.p.a. -22.5 £72.25 sq.ft.p.a. -12.5 103.50 1114 -37.0 78.14 841 -24.6 10 27-30

London (West End), England £87.50 sq.ft.p.a. -27.1 £120.50 sq.ft.p.a. -20.0 172.62 1858 -42.4 130.33 1403 -31.0 10 18-24

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12 monthsCurrent

per sq. ft.Current

per sq. m.% change12 months

Currentper sq. ft.

Currentper sq. m.

% change12 months

Typical lease term (yrs.)


Unless otherwise indicated, all data reflect office space in the central commercial district. The term “sub” means suburban and is used primarily in North American markets. The local rent data is expressed in either gross or net terms depending on the prevailing local practice. Total occupancy costs (i.e., gross rents) are expressed in local currency, Euros and U.S. dollars for all markets. A complete explanation of the reported data appears at the end of this publication.Local figures are based on local measurements. The standardized Euro occupancy costs account for differing values in net and gross measurements.

Europe, Middle East and Africa: Office Rents and Occupancy Costs

Luxembourg City, Luxembourg € 40.00 sq.m.p.m. 0.0 € 43.33 sq.m.p.m. 0.0 US$ 77.58 US$ 835 -16.4 € 58.55 € 630 0.0 3/6/9 1/ year secured

Lyon, France € 260.00 sq.m.p.a. 4.0 € 325.00 sq.m.p.a. 3.2 43.02 463 -13.7 32.47 349 3.2 3/6/9 3-6

Madrid, Spain € 34.00 sq.m.p.m. -16.0 € 38.25 sq.m.p.m. -17.7 66.47 716 -31.2 50.17 540 -17.7 3 + 3 or 5 + 5 2-5

Malaga, Spain € 15.00 sq.m.p.m. -16.7 € 17.40 sq.m.p.m. -14.7 30.24 325 -28.7 22.82 246 -14.7 3 + 3 1-2

Manchester, England £28.50 sq.ft.p.a. 0.0 £44.50 sq.ft.p.a. 1.1 63.75 686 -27.1 48.13 518 -12.8 10 36

Marseille, France € 300.00 sq.m.p.a. 39.5 € 365.00 sq.m.p.a. 30.4 48.31 520 9.0 36.46 392 30.4 3/6/9 3-6

Milan, Italy € 550.00 sq.m.p.a. 14.6 € 598.00 sq.m.p.a. 13.3 80.89 871 -5.3 61.05 657 13.3 6 + 6 6

Moscow, Russia US$ 1200.00 sq.m.p.a. -29.4 US$ 1557.60 sq.m.p.a. -26.7 170.24 1832 -26.7 128.48 1383 -12.4 3-5 6

Munich, Germany € 31.00 sq.m.p.m. -1.6 € 34.50 sq.m.p.m. -0.9 56.00 603 -17.1 42.27 455 -0.9 5 + 5 3-9

Nicosia, Cyprus € 16.00 sq.m.p.m. -5.9 € 18.85 sq.m.p.m. -3.3 29.94 322 -19.2 22.60 243 -3.3 2 + 2 0

Oslo, Norway NKr 3300.00 sq.m.p.a. -26.7 NKr 3570.00 sq.m.p.a. -25.5 54.75 589 -43.7 41.33 445 -32.7 5-10 0-2

Palma De Mallorca, Spain € 14.00 sq.m.p.m. -6.7 € 15.00 sq.m.p.m. -9.1 26.07 281 -24.0 19.67 212 -9.1 2 + 3 1-2

Paris La Défense, France € 530.00 sq.m.p.a. 3.5 € 650.00 sq.m.p.a. -0.3 86.04 926 -16.6 64.93 699 -0.3 3/6/9 6-12

Paris, France € 780.00 sq.m.p.a. -1.1 € 868.00 sq.m.p.a. -3.2 114.89 1237 -19.1 86.71 933 -3.2 3/6/9 6-12

Prague, Czech Republic € 23.00 sq.m.p.m. 12.2 € 32.43 sq.m.p.m. 13.6 53.23 573 -5.0 40.17 432 13.6 5 3

Rome, Italy € 440.00 sq.m.p.a. 10.0 € 480.00 sq.m.p.a. 9.1 64.93 699 -8.8 49.00 527 9.1 6 + 6 6

Stockholm, Sweden SKr 4100.00 sq.m.p.a. -6.8 SKr 4680.00 sq.m.p.a. -6.0 58.59 631 -32.4 44.23 476 -19.2 3-5 0-6

Tel Aviv, Israel US$ 22.50 sq.m.p.m. -25.0 US$ 32.50 sq.m.p.m. -20.2 45.29 488 -20.2 34.18 368 -4.6 3-5 0

Thessaloniki, Greece € 18.00 sq.m.p.m. 12.5 € 22.00 sq.m.p.m. -1.6 34.94 376 -17.7 26.37 284 -1.6 12 + 4 1

Valencia, Spain € 18.00 sq.m.p.m. 0.0 € 20.25 sq.m.p.m. -2.4 35.19 379 -18.4 26.56 286 -2.4 2 + 3 2

Vienna, Austria € 23.00 sq.m.p.m. 2.2 € 27.00 sq.m.p.m. 3.8 41.98 452 -13.2 31.68 341 3.8 3-5 3-6

Warsaw, Poland € 28.00 sq.m.p.m. -15.2 € 33.00 sq.m.p.m. -15.4 54.16 583 -29.2 40.88 440 -15.4 5 3-6

Zurich, Switzerland SF 900.00 sq.m.p.a. -5.3 SF 940.00 sq.m.p.a. -5.1 76.69 825 -17.5 57.85 623 -1.4 5 + 5 1-3

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Terms and DefinitionsGlobal MarketView: Office Occupancy Costs provides a semi-annual

snapshot of occupancy costs for prime office space throughout the world.

Because office occupancy lease rates and expenses can vary substantively

not only across world markets, but also within the same market area, these

data are meant to provide comparative benchmarks only.

Comparative Office Occupancy Costs

In comparing international office cost quotations and leasing practices,

the most common differences in reporting are the units of measure and

currency, and how occupancy-related costs are reflected in quoted lease

rates. For example, in the U.S., office units are measured in sq. ft., while

Japan uses the tsubo. Great Britain measures currency in pounds, while

Thailand uses the baht. Also in the U.S., rents are most often reported in

“gross” terms that reflect virtually all costs of occupancy, while lease rates in

many countries may be reported on a “net” basis and exclude such costs as

management, property taxes and basic ongoing building maintenance.

Benchmarks For Measure, Currency and Terms

To facilitate comparisons across markets, Global MarketView: Office

Occupancy Costs also reports local office occupancy costs in two common

currencies, U.S. dollars and Euros, as well as two units of measure, square

feet (sq. ft.) and square meters (sq. m.).

Changes over the past 12 months are also reported in local currency, U.S.

dollars and Euros.

Explanation of Columns

Rent-Local Currency/Measure: The rent quoted is the typical “achievable”

rent for a 1,000-sq.-m. (10,000-sq.-ft.) unit in a top-quality (Class A)

building in a prime location. Rents are expressed as headline rent, without

accounting for any tenant incentives that may be necessary to achieve it.

Rents are stated in the local currency and prevailing unit of measure, as

well as in those terms—gross or net—that are customarily employed in the

respective market.

Office rents in Taiwan are quoted as “ping p.m.,” in Japan as “tsubo p. m.,”

and in Korea as “pyung p.m.” The ping, tsubo and pyung all are approxi-

mately 36 sq. ft. Each is the traditional measure of area in its respective

country, based on the equivalent measurement of two tatami mats.

Percentage Change: Documents the rate of change in local rents over

the preceding 12 months. Because these data are expressed in the local

currency, they can vary dramatically from the Euro and U.S. dollar-adjusted

changes reported under Total Occupancy Cost.

Total Occupancy Cost: Local office costs are reported in lo-

cal currency, Euros and U.S. dollars on a per annum basis; both

per sq. ft. and per sq. m. measurements are quoted. This number reflects

all occupancy costs, and therefore corresponds to “gross” rents.

Typical Rent Free Period & Typical Lease Term: The rent free column

documents the time period, if any, for which no rent is collected for prime

office space in the respective local market. Typically, the less “free rent”

available, the stronger the market. Typical lease term refers to the usual

duration of contracted leases in each respective market.

Cover Image: Santiago De Chile

Copyright © 2009, CB Richard Ellis. All rights reserved. This report contains information from sources we believe to be reliable, but we make no representation, warranty or guaranty of its accuracy. Opinions, assumptions and estimates constitute CBRE’s judgement as of the date this report is first released and are subject to change without notice. CBRE holds all right, title and interest in this report and the proprietary information contained herein. This report is published for the use of CBRE and its clients only. Redistribution in whole or part to any third party without the prior written consent of CBRE is strictly prohibited.

Raymond Torto, CRE, Ph.D. (Co-Chair) Global Chief Economist 617 912 5225 [email protected] Karen Ellzey (Co-Chair) Executive Managing Director Global Corporate Services 617 869 6154 [email protected]

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Alan Dalgleish Executive Director, CBRE Consulting Asia 65 6326 1237 [email protected]

Darcy Frank Mackay Senior Managing Director Global Corporate Services 415 772 0249 [email protected] Andrew Ness Head of Research Asia 852 2820 2845 [email protected]

Rob Oldham Director, Strategic Marketing EMEA 44 207 182 3579 [email protected]

Jon Southard Director of Forecasting CBRE Econometric Advisors (formerly Torto Wheaton Research) 617 912 5228 [email protected]

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