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December 2013
Global Prime Office Occupancy Costs
Costs Continue to Rise
GLOBAL RESEARCH AND CONSULTING
© 2013, CBRE, Inc.
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EXECUTIVE SUMMARY• Global prime office occupancy costs increased at a 2.2% annual rate for the 12 months ending Q3 2013,
up from the 1.4% annual growth rate seen at the end of Q1 2013.
• All three regions saw annual growth in prime office occupancy costs, led by the Americas, at 4.6%, followed by Asia Pacific, at 3.2%, and EMEA, at 0.4%.
• Year-over-year, prime office occupancy costs rose in 69 markets, were unchanged in 24 and decreased in 33.
• London – Central (West End) overtook Hong Kong (Central) as the world’s most expensive prime office market.
• Of the top 10 most expensive markets, six were in Asia Pacific and four were in EMEA. The most expensive market in the Americas, New York (Midtown Manhattan), ranked 11th.
PACE OF INCREASE IN PRIME OFFICE OCCUPANCY COSTS ACCELERATINGIn line with the global economic recovery, occupancy costs for prime office space have continued to grow over the past year. For the 12 months ending Q3 2013, global prime of-fice occupancy costs grew at a 2.2% annual pace, up from the 1.4% growth rate seen during the 12 months ending Q1 2013. The Americas posted the highest year-over-year growth rate, at 4.6%, followed by Asia Pacific, at 3.2%, and EMEA, at 0.4 %. This positioning is reflective of the relative strength of supply and demand conditions for prime space within each region.
Though EMEA posted the lowest 12-month increase in prime occupancy costs, it was home to the world’s most
expensive market, with London – Central (West End), at US$259 per sq. ft. per annum, replacing Hong Kong (Central) as the top-ranked market worldwide. A combina-tion of development restrictions in core areas of London, as well as a resurgence in leasing activity, contributed to the West End’s low vacancy rate and placed upward pressure on costs—which rose 14.3% year-over-year as measured by local currency. The area is a traditionally popular lo-cation for parts of the finance sector, such as hedge fund managers and private banks, who are willing to pay a pre-mium for prime office space in the most prestigious areas. Demand from other sectors, notably technology, has also strengthened.
TOP 10 – MOST EXPENSIVERanked by prime office space occupancy costs in US$ per sq. ft. per annum as of Q3 2013
© 2013, CBRE, Inc.
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Source: CBRE Research, Q3 2013.
Figure 1: Global 50 Index – Most Expensive
1 London - Central (West End), United Kingdom 259.36 26 Washington, D.C. (Downtown), U.S. 86.47
2 Hong Kong (Central), Hong Kong 234.30 27 Perth, Australia 86.24
3 Beijing (Finance Street), China 197.05 28 Seoul (Yeouido), South Korea 83.09
4 Beijing (CBD), China 189.67 29 New York (Downtown Manhattan), U.S. 82.55
5 Hong Kong (West Kowloon), Hong Kong 170.42 30 Los Angeles (Suburban), U.S. 79.10
6 Moscow, Russian Federation 165.05 31 Jakarta, Indonesia 78.08
7 New Delhi (Connaught Place - CBD), India 156.65 32 Mumbai (Nariman Point - CBD), India 77.42
8 Tokyo (Marunouchi Otemachi), Japan 154.67 33 Stockholm, Sweden 76.16
9 London - Central (City), United Kingdom 142.71 34 Guangzhou, China 74.84
10 Paris, France 122.10 35 Edinburgh, United Kingdom 72.86
11 New York (Midtown Manhattan), U.S. 120.65 36 Manchester, United Kingdom 72.86
12 Shanghai (Pudong), China 119.50 37 Milan, Italy 72.55
13 Rio de Janeiro, Brazil 112.22 38 Aberdeen, United Kingdom 72.46
14 Shanghai (Puxi), China 111.69 39 Birmingham, United Kingdom 70.76
15 Mumbai (Bandra Kurla Complex), India 109.24 40 Brisbane, Australia 70.20
16 São Paulo, Brazil 105.11 41 Frankfurt, Germany 69.77
17 Sydney, Australia 104.39 42 Bristol, United Kingdom 69.62
18 San Francisco (Downtown), U.S. 102.00 43 Taipei, Taiwan 68.48
19 Geneva, Switzerland 101.30 44 Oslo, Norway 66.93
20 Singapore, Singapore 98.50 45 Ho Chi Minh City, Vietnam 66.62
21 Seoul (CBD), South Korea 97.22 46 Glasgow, United Kingdom 66.39
22 Boston (Downtown), U.S. 93.75 47 San Francisco (Peninsula), U.S. 64.40
23 Dubai, United Arab Emirates 92.56 48 Leeds, United Kingdom 63.15
24 Zurich, Switzerland 91.44 49 Mexico City, Mexico 62.53
25 Istanbul, Turkey 86.78 50 Toronto (Downtown), Canada 61.77
Ranked by prime office space occupancy costs in US$ per sq. ft. per annum as of Q3 2013
Though Hong Kong (Central), at US$234 per sq. ft. per annum, dropped to second place, it remained the only other market in the world with an occupancy cost exceed-ing $200 per sq. ft. per annum. Banks and high-margin financial firms, such as invest-ment companies and asset management companies, are traditionally the dominant oc-cupiers in the market, along with related legal and ac-counting firms. Although these occupiers have become more cost sensitive and open to op-portunities in decentralized areas, premium space is still highly sought after, especially by mainland Chinese banks, investment companies and enterprises, who view Central as a platform for pursuing overseas business opportunities. However, the cost-conscious approach to decision-making by large occupiers, coupled with a vacancy rate higher than
most other districts in Hong Kong, have pressured Central landlords to become more flexible in rental negotiations. As a result, occupancy costs have dropped 4.7% on a local currency basis over the past 12 months.
There were other modest changes in the ranking of the most expensive markets. For instance, Mumbai (Bandra Kurla Complex) dropped to the 15th position, while Paris entered the top 10 due to exchange rate changes.
SIX OF THE TOP 10 MOST EXPENSIVE MARKETS REMAIN IN ASIAOf the world’s top 10 most expensive markets, six were in Asia Pacific and four were in EMEA. Of the top 50, 20 were in Asia Pacific, 19 were in EMEA and 11 were in the Americas.
London – Central (West End), at US$259 per sq. ft. per annum, replaced Hong Kong (Central) as the top-ranked market worldwide.
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There are several general reasons and, of course, many local influences, as to why Asia Pacific has such a high number of markets in the top ranks. One common theme, however, is that several key Asia markets have a limited supply of prime office space, the kind in demand by the major institutions that locate within these markets. This shortage, coupled with strong demand, has driven prime occupancy costs higher. These markets tend to share certain common characteristics:
• They are often the region-al headquarters of large, multinational firms that require a central loca-tion with access to major global transit routes.
• They are highly exposed to the financial services industry, as the most expensive office markets are typically world-renowned money centers.
• They are also “prestige” or “emerging prestige” mar-kets—cities where leading global companies want to have a presence due to the stature of the location and address.
• Not surprisingly, the most expensive office locations are characterized as having significant barriers to new sup-ply. New supply in key global core markets has been limited, driving up occupancy costs despite the global economic environment.
PRIME OFFICE OCCUPANCY COST GROWTH IN THE AMERICAS OUTPACING ASIA PACIFIC AND EMEAWhile the list of the world’s most expensive markets for oc-cupying prime office space remained relatively unchanged,
there were several notable shifts in prime office occu-pancy costs over the past 12 months, most notably in the Americas. As the most expen-sive markets are ranked in U.S. dollars, the rankings can
be impacted by currency fluctuations. As such, increases and decreases in occupancy costs are measured in local currency to reflect the effects of supply and demand except in unique circumstances in markets such as Jakarta.
For the 12 months ending Q3 2013, occupancy costs in-creased in 69 markets, remained unchanged in 24 and
*Leases in Jakarta are typically written in U.S. dollars, but paid in rupiah, which means the occupancy cost increase is greatly affected by currency depreciation in Indonesia.
Source: CBRE Research, Q3 2013.
Figure 2: Global 50 Index – Largest Annual Changes
Top 35 Increases
1 Jakarta, Indonesia* 76.9 19 Beijing (Finance Street), China 6.9
2 Boston (Downtown), U.S. 15.4 20 Buenos Aires, Argentina 6.8
3 Mexico City, Mexico 14.7 21 Ho Chi Minh City, Vietnam 6.8
4 London - Central (West End), United Kingdom 14.3 22 Dallas (Suburban), U.S. 6.7
5 San Francisco (Downtown), U.S. 13.3 23 Marseille, France 6.3
6 Monterrey, Mexico 12.9 24 Boston (Suburban), U.S. 6.3
7 New York (Downtown Manhattan), U.S. 10.2 25 Dublin, Ireland 6.2
8 Washington, D.C. (Suburban), U.S. 9.4 26 Seattle (Downtown), U.S. 5.8
9 Santiago, Chile 9.1 27 New York (Midtown Manhattan), U.S. 5.6
10 Seattle (Suburban), U.S. 9.0 28 Leeds, United Kingdom 5.4
11 Bangkok, Thailand 8.8 29 New Delhi (Gurgaon), India 5.0
12 Houston (Downtown), U.S. 8.4 30 London - Central (City), United Kingdom 4.9
13 Oslo, Norway 8.3 31 Istanbul, Turkey 4.8
14 Houston (Suburban), U.S. 8.1 32 Calgary (Suburban), Canada 4.4
15 Manila, Philippines 7.8 33 Lyon, France 4.2
16 San Francisco (Peninsula), U.S. 7.7 34 Rio de Janeiro, Brazil 3.9
17 Lille, France 7.7 35 Lima, Peru 3.8
18 Denver (Downtown), U.S. 7.3
Prime office space occupancy costs in local currency and measure (ranked by 12-month % change increases and decreases as of Q3 2013)
Of the world’s top 10 most expensive markets, six were in Asia Pacific and four were in EMEA.
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decreased in 33. Of the 69 markets with increases, seven were in double digits.
Notably, eight of the 10 fastest growing prime occupancy cost markets were in the Americas. This result, while atypical compared to recent trends, was consistent with reports of growing economic strength and rebound within the region.
Of the 33 markets that posted a decrease in prime office occupancy costs, only two were in double digits, with Palma de Mallorca and Valencia falling 11.3% and 10.7%, respectively, over the past 12 months, a reflection of the effects of the lingering Eurozone crisis.
Jakarta’s mammoth 76.9% year-over-year increase in prime office occupancy costs was underpinned by grow-ing office demand, coupled with diminishing available supply, especially for prime office space within the central business district. Given that leases in Jakarta are typically written in U.S. dollars, the weakening of the Indonesian rupiah amplified the increase. Although the occupancy cost change is significant, we are expecting growth to slow go-ing forward.
In Downtown Boston, which posted a 15.4% annual increase in occupancy costs, rents increased as a result of extremely tight market conditions, as strong demand from technology tenants, combined with low vacancy rates, has given landlords leeway to increase rents significantly.
Mexico City is in the middle of a transformation of its sky-line, with the market delivering high-quality buildings with elevated prime rents. This new, high-priced supply, coupled with strong occupier demand, has led to higher occupancy costs, which were up 14.7% year-over-year.
Prime, headline rents in London – Central (West End) have increased in each quarter so far in 2013 amid im-proving sentiment among high-end financial occupiers who are prepared to pay the highest rents for well-located space in high-quality buildings. Occupancy costs, which increased 14.3% over the past 12 months, have also been driven higher due to limited availability.
Costs in San Francisco (Downtown) have grown amid strong demand from the technology industry, as tech ten-ants citywide expand their footprints. Though these tech tenants do not typically seek prime office space, declining
market-wide vacancy has reduced the number of options for tenants in other industries that may be open to taking prime space. As a result, landlords are pushing rents for the declining number of available spaces, powering a 13.3% annual increase in occupancy costs.
Reflective of the strong Mexican economy, Monterrey has seen strong occupier demand, which, in turn, has led to in-creases in asking rents for the limited supply of prime office space. As a result, prime occupancy costs have increased 12.9% over the past year. Construction activity, however, will lead to increased prime stock and rental adjustments in the future.
Rents for prime office space rose steadily in New York (Downtown Manhattan) over the past 12 months due to the addition of space that was priced above the average, resulting in a 10.2% year-over-year increase in
occupancy costs for the market. As of Q3 2013, vacancy for prime space was significantly below Downtown’s overall vacancy rate of 9.0%, though that will likely change as new, prime office space at the World Trade Center comes online.
In Washington, D.C. (Suburban), where prime oc-cupancy costs were up 9.4% over the past 12 months, contiguous blocks of space continued to diminish within prime, amenity-rich buildings, lowering the prime vacancy rate to 8.7%. In Tysons Corner, Metrorail access has long been the one missing amenity. However, in early 2014, four new Silver Line stations will open, connecting the market to downtown Washington, D.C., and Dulles International Airport. Prime buildings near these stops have experienced stronger leasing activity, which led to increases in prime rents. Meanwhile, the Bethesda/Chevy Chase market has tightened over the past two quarters as several large blocks of space have been taken off the market, which resulted in rental increases.
In Santiago, low availability and strong demand from domestic and international occupiers seeking prime space in the central business district pushed up occupancy costs in this market. Year-over-year, prime office occupancy costs rose 9.1%.
Over the last seven years, the software industry’s footprint in Seattle (Suburban), where prime rents were up 9.0% over the past year, has grown by well over 3 million sq. ft.
In line with the global economic recovery, occupancy costs for prime office space have continued to grow over the past year.
© 2013, CBRE, Inc.
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Source: CBRE Research, Q3 2013.
Figure 2: Global 50 Index – Largest Annual Changes
Top 15 Decreases
1 Palma de Mallorca, Spain -11.3 9 Singapore, Singapore -3.7
2 Valencia, Spain -10.7 10 Bucharest, Romania -3.5
3 Milan, Italy -7.1 11 Oporto, Portugal -3.4
4 São Paulo, Brazil -5.9 12 Madrid, Spain -3.3
5 Mumbai (Nariman Point - CBD), India -5.1 13 Tel Aviv, Israel -3.1
6 Hong Kong (Central), Hong Kong -4.7 14 Paris, France -3.1
7 Hanoi, Vietnam -4.6 15 Guadalajara, Mexico -3.1
8 Bratislava, Slovakia -4.2
Prime office space occupancy costs in local currency and measure (ranked by 12-month % change increases and decreases as of Q3 2013)
With the number of startups and technology firms in the area increasing, there is a limited supply of prime vacant space in the Bellevue central business district and other suburban submarkets.
EUROZONE WOES, SUPPLY AND DEMAND IMBALANCES WEIGH ON SOME EUROPEAN AND ASIAN MARKETSOccupancy costs decreased year-over-year in 33 markets. Looking at the top 10 markets that posted decreases, some showing declines were located within the Eurozone, and, as
mentioned earlier, their performance was reflective of the economic malady within the zone.
At the same time, other markets that have posted strong occupancy costs in the past, and continued to have high occupancy costs overall, had to adjust to some short-term supply and demand imbalances. For example, Hong Kong (Central) and Singapore, which both ranked among the top 20 most expensive markets worldwide in Q3 2013, experienced declines in occupancy costs of 4.7% and 3.7%, respectively, over the past 12 months.
© 2013, CBRE, Inc.
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Location Prime Rent Total Occupancy Cost Local Currency/Measure*
Total Occupancy Cost US$*
Total Occupancy Cost Euro €*
Terms
Local currency/measure Current per local measure
% change12 months
Current per local measure
% change12 months
Current per sq. ft./annum
% change12 months
Currentper sq. m./annum
% change12 months
Typical lease term
(years)
Typical rent free (months)
Tenancy improvements (per local currency/
measure)
Adelaide, Australia AUD sq.m. p.a. 413.33 1.3 518.33 1.0 45.02 -9.2 357.99 -13.7 5 12 0
Auckland, New Zealand NZD sq.m. p.a. 492.50 0.5 652.50 0.8 50.47 1.0 401.39 -4.0 9 7.5 0
Bangalore (CBD), India INR sq.ft. p.m. 128.00 2.4 182.43 2.3 34.97 -13.6 278.11 -17.9 3+3 1 0
Bangkok, Thailand THB sq.m. p.m. 887.00 8.8 887.00 8.8 31.63 7.4 251.51 2.1 3+3 1-2 0
Beijing (Finance Street), China RMB sq.m. p.m. 750.00 7.1 1,082 6.9 197.05 9.7 1567 4.3 2-3 0-1 0
Beijing (CBD), China RMB sq.m. p.m. 700.00 0.0 1,041 -0.1 189.67 2.6 1508 -2.5 2-3 0-1 0
Brisbane, Australia AUD sq.m. p.a. 683.33 -1.4 808 -1.2 70.20 -11.2 558.28 -15.6 5 14 0
Canberra, Australia AUD sq.m. p.a. 352.00 0.0 418.00 0.7 36.30 -9.5 288.70 -13.9 5 9 0
Guangzhou, China RMB sq.m. p.m. 230.00 0.0 410.94 0.0 74.84 2.7 595.19 -2.4 3-5 2-3 0
Hanoi, Vietnam US$ sq.m. p.m. 41.00 -4.6 45.10 -4.6 50.28 -4.6 399.85 -9.3 3 3 0
Ho Chi Minh City, Vietnam US$ sq.m. p.m. 37.30 7.5 59.76 6.8 66.62 6.8 529.85 1.5 3 3 0
Hong Kong (Central), Hong Kong HKD sq.ft. p.m. 133.65 -5.5 151.58 -4.7 234.30 -4.9 1865 -9.5 3 or 6 1-4 0
Hong Kong (West Kowloon), Hong Kong HKD sq.ft. p.m. 96.15 -2.6 110.25 -2.0 170.42 -2.1 1357 -6.9 3 or 6 1-4 0
Jakarta, Indonesia** IDR sq.m. p.m. 663,300 76.9 810,700 76.9 78.08 46.3 620.92 39.0 3 1-2 0
Kuala Lumpur, Malaysia MYR sq.ft. p.m. 12.00 0.0 12 0.0 44.19 -6.1 351.42 -10.8 3 1-3 0
Manila, Philippines PHP sq.m. p.m. 1,000.00 9.9 1,310 7.8 33.60 3.5 267.16 -1.6 3-5 2-4 0
Melbourne, Australia AUD sq.m. p.a. 496.00 0.7 642.00 0.7 55.76 -9.5 443.40 -14.0 10 24 0
Mumbai (Bandra Kurla Complex), India INR sq.ft. p.m. 337.50 -3.6 569.85 -1.6 109.24 -16.9 869 -21.1 3+3+3 2-3 0
Mumbai (Nariman Point - CBD), India INR sq.ft. p.m. 280.00 -6.7 403.85 -5.1 77.42 -19.9 615.65 -23.8 3+3+3 2-3 0
New Delhi (Connaught Place - CBD), India INR sq.ft. p.m. 400.00 1.3 817.16 1.2 156.65 -14.5 1246 -18.8 3+3+3 1 0
New Delhi (Gurgaon), India INR sq.ft. p.m. 132.00 5.6 230.76 5.0 44.24 -11.4 351.80 -15.8 3+3+3 1-4 0
Perth, Australia AUD sq.m. p.a. 840.00 -1.2 993 -1.0 86.24 -11.0 685.83 -15.4 5 7.3 0
Seoul (CBD), South Korea KRW sq.m. p.m. 36,300 0.0 93,792 2.9 97.22 6.5 773.13 1.2 3-5 2-4 0
Seoul (Yeouido), South Korea KRW sq.m. p.m. 28,334 2.9 80,162 3.5 83.09 7.2 660.78 1.9 3-5 2-4 0
Shanghai (Pudong), China RMB sq.m. p.m. 426 0.0 656 0.0 119.50 2.7 950.28 -2.4 2-3 0-2 0
Shanghai (Puxi), China RMB sq.m. p.m. 395.42 0.0 613.27 0.5 111.69 3.2 888.24 -1.9 2-3 0-2 0
Singapore, Singapore SGD sq.ft. p.m. 10.30 -3.7 10.30 -3.7 98.50 -5.9 783.33 -10.5 3+3 2 0
Sydney, Australia AUD sq.m. p.a. 1,020 -2.7 1,202 -2.4 104.39 -12.3 830 -16.6 8.7 34.1 0
Taipei, Taiwan NTD ping. p.m. 3,250 0.8 6,004 0.7 68.48 -0.1 544.52 -5.1 3-5 1-3 0
Tokyo, Japan JPY tsubo p.m. 39,500 -1.3 45,000 -1.1 154.67 -21.6 1230 -25.5 5 6 0
Wellington, New Zealand NZD sq.m. p.a. 380 0.0 525 0.0 40.77 0.6 322.96 -4.7 9 5 0
Figure 3: Asia Pacific: Prime Office Occupancy Costs – Q3 2013
*Occupancy costs include service charges and taxes and are standardized on a net internal area basis.**Leases in Jakarta are typically written in U.S. dollars, but paid in rupiah, which means the occupancy cost increase is greatly affected by currency depreciation in Indonesia.
Source: CBRE Research, Q3 2013.
© 2013, CBRE, Inc.
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Location Prime Rent Total Occupancy Cost Local Currency/Measure*
Total Occupancy Cost US$*
Total Occupancy Cost Euro €*
Terms
Local currency/measure Current per local measure
% change12 months
Current per local measure
% change12 months
Current per sq. ft./annum
% change12 months
Currentper sq. m./annum
% change12 months
Typical lease term
(years)
Typical rent free (months)
Tenancy improvements (per local currency/
measure)
Atlanta (Downtown), U.S. US$ sq.ft. p.a. 29.12 2.4 33.49 2.4 33.49 2.4 266.31 -2.6 5-10 6-13 30-45
Atlanta (Suburban), U.S. US$ sq.ft. p.a. 24.48 1.6 28.15 1.6 28.15 1.6 223.88 -3.5 5-10 5-10 25-40
Boston (Downtown), U.S. US$ sq.ft. p.a. 75.00 15.4 93.75 15.4 93.75 15.4 745.53 9.7 10 0 60-65
Boston (Suburban), U.S. US$ sq.ft. p.a. 34.00 6.3 40.80 6.3 40.80 6.3 324.46 1.0 5-7 1-3 30-40
Buenos Aires, Argentina US$ sq.m. p.m. 30.00 -3.2 45.40 6.8 50.62 6.8 402.52 1.5 3-5 2-6 0
Calgary (Downtown), Canada CAD sq.ft. p.a. 39.90 -5.0 59.94 1.9 58.30 -2.6 463.60 -7.4 5 2 50
Calgary (Suburban), Canada CAD sq.ft. p.a. 24.81 1.5 40.32 4.4 39.22 -0.1 311.85 -5.1 5 1 20
Caracas, Venezuela** VEF sq.m. p.m. 1,821.00 376.4 1,969.47 353.9 349.19 209.8 2,776.85 194.5 3-5 3 0
Chicago (Downtown), U.S. US$ sq.ft. p.a. 29.50 2.1 49.25 0.2 49.25 0.2 391.65 -4.8 6-12 6-12 55-75
Chicago (Suburban), U.S. US$ sq.ft. p.a. 14.50 -4.9 26.75 -1.8 26.75 -1.8 212.73 -6.7 5-7 5-10 20-50
Dallas (Downtown), U.S. US$ sq.ft. p.a. 31.65 0.0 36.40 0.0 36.40 0.0 289.45 -4.9 5-10 5-8 40-50
Dallas (Suburban), U.S. US$ sq.ft. p.a. 30.26 6.7 34.80 6.7 34.80 6.7 276.73 1.5 3-7 2-5 10-25
Denver (Downtown), U.S. US$ sq.ft. p.a. 40.50 7.3 40.50 7.3 40.50 7.3 322.07 2.0 7-10 6-7 45-50
Denver (Suburban), U.S. US$ sq.ft. p.a. 30.25 2.5 30.25 2.5 30.25 2.5 240.56 -2.5 7-10 5-7 43-48
Guadalajara, Mexico US$ sq.m. p.m. 26.56 -3.4 37.04 -3.1 41.30 -3.1 328.42 -7.9 3-5 2 400-500
Houston (Downtown), U.S. US$ sq.ft. p.a. 45.00 8.4 56.25 8.4 56.25 8.4 447.32 3.1 5-10 3 30-45
Houston (Suburban), U.S. US$ sq.ft. p.a. 40.00 8.1 47.20 8.1 47.20 8.1 375.35 2.8 5-10 3-6 25-40
Lima, Peru US$ sq.m. p.m. 25.00 4.2 30.22 3.8 33.69 3.8 267.92 -1.4 5 1-2 0
Los Angeles (Downtown), U.S. US$ sq.ft. p.a. 25.00 2.0 45.60 2.6 45.60 2.6 362.63 -2.5 5-10 4-10 30-60
Los Angeles (Suburban), U.S. US$ sq.ft. p.a. 70.00 2.9 79.10 2.9 79.10 2.9 629.03 -2.2 5-10 6-12 30-55
Mexico City, Mexico US$ sq.m. p.m. 40.00 15.4 56.09 14.7 62.53 14.7 497.25 9.0 3-5 3-4 450-600
Monterrey, Mexico US$ sq.m. p.m. 30.00 13.0 41.16 12.9 45.89 12.9 364.92 7.3 3-5 2 400-500
Montreal (Downtown), Canada CAD sq.ft. p.a. 21.76 4.2 41.75 3.2 40.61 -1.3 322.91 -6.2 5 3 20
Montreal (Suburban), Canada CAD sq.ft. p.a. 14.43 -1.0 28.00 -0.5 27.23 -4.8 216.57 -9.6 7 3 11
New York (Downtown Manhattan), U.S. US$ sq.ft. p.a. 65.00 10.2 82.55 10.2 82.55 10.2 656.47 4.7 10 18 70
New York (Midtown Manhattan), U.S. US$ sq.ft. p.a. 95.00 5.6 120.65 5.6 120.65 5.6 959.45 0.3 10 9 70
Panama City, Panama US$ sq.m. p.m. 25.00 0.0 26.88 0.0 29.97 0.0 238.32 -5.0 3-5 1-2 700-850
Rio de Janeiro, Brazil BRL sq.m. p.m. 190.00 2.7 224.21 3.9 112.22 -5.3 892.41 -10.0 5 2-4 0
San Francisco (Downtown), U.S. US$ sq.ft. p.a. 85.00 13.3 102.00 13.3 102.00 13.3 811.14 7.7 5-10 0-3 35-60
San Francisco (Peninsula), U.S. US$ sq.ft. p.a. 56.00 7.7 64.40 7.7 64.40 7.7 512.13 2.4 3-7 1-4 10-40
Figure 4: Americas: Prime Office Occupancy Costs – Q3 2013
*Occupancy costs include service charges and taxes and are standardized on a net internal area basis.**Caracas is omitted from this report’s ranking tables
Source: CBRE Research, Q3 2013.
© 2013, CBRE, Inc.
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Location Prime Rent Total Occupancy Cost Local Currency/Measure*
Total Occupancy Cost US$*
Total Occupancy Cost Euro €*
Terms
Local currency/measure Current per local measure
% change12 months
Current per local measure
% change12 months
Current per sq. ft./annum
% change12 months
Currentper sq. m./annum
% change12 months
Typical lease term
(years)
Typical rent free (months)
Tenancy improvements (per local currency/
measure)
Santiago, Chile CLF sq.m. p.m. 0.79 8.2 1.08 9.1 56.19 6.0 446.80 0.8 1-3 8-10
São Paulo, Brazil BRL sq.m. p.m. 170.00 -10.5 210.00 -5.9 105.11 -14.2 835.85 -18.5 5 4-6 0
Seattle (Downtown), U.S. US$ sq.ft. p.a. 36.50 5.8 43.07 5.8 43.07 5.8 342.51 0.6 5-10 3-6 30-50
Seattle (Suburban), U.S. US$ sq.ft. p.a. 36.50 9.0 41.61 9.0 41.61 9.0 330.90 3.6 5-10 3-6 20-60
Toronto (Downtown), Canada CAD sq.ft. p.a. 32.66 7.2 63.51 2.5 61.77 -1.9 491.22 -6.8 5 3 25
Toronto (Suburban), Canada CAD sq.ft. p.a. 17.04 1.7 31.78 0.3 30.91 -4.1 245.80 -8.8 5 2 25
Vancouver (Downtown), Canada CAD sq.ft. p.a. 36.22 -2.6 56.41 -1.9 54.86 -6.1 436.30 -10.8 4 2 25
Vancouver (Suburban), Canada CAD sq.ft. p.a. 22.23 3.9 35.30 3.7 34.33 -0.8 273.03 -5.7 6 3 22
Washington, D.C. (Downtown), U.S. US$ sq.ft. p.a. 72.06 -1.1 86.47 -1.1 86.47 -1.1 687.66 -6.0 5-10 6-12 85-105
Washington, D.C. (Suburban), U.S. US$ sq.ft. p.a. 35.37 9.4 42.44 9.4 42.44 9.4 337.53 4.0 4-6 4-5 35-42
Figure 4: Americas: Prime Office Occupancy Costs – Q3 2013
* Occupancy costs include service charges and taxes and are standardized on a net internal area basis.Source: CBRE Research, Q3 2013.
© 2013, CBRE, Inc.
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Location Prime Rent Total Occupancy Cost Local Currency/Measure*
Total Occupancy Cost US$*
Total Occupancy Cost Euro €*
Terms
Local currency/measure Current per local measure
% change12 months
Current per local measure
% change12 months
Current per sq. ft./annum
% change12 months
Currentper sq. m./annum
% change12 months
Typical lease term
(years)
Typical rent free (months)
Tenancy improvements (per local currency/
measure)
Aberdeen, United Kingdom GBP sq.ft. p.a. 31.50 0.0 44.75 0.0 72.46 3.2 576.21 -3.2 10 6 3.25-3.50
Abu Dhabi, United Arab Emirates AED sq.m. p.a. 1,800.00 0.0 2,050.00 0.0 51.85 0.0 412.33 -5.0 1-5 1-2 0
Amsterdam, Netherlands EUR sq.m. p.a. 340.00 0.6 411.24 0.1 51.71 5.4 411.24 0.1 5+5 12 or 24 0
Athens, Greece EUR sq.m. p.m. 23.00 0.0 30.70 0.0 46.32 5.2 368.39 0.0 12+4 2 0
Barcelona, Spain EUR sq.m. p.m. 17.75 -1.4 24.44 1.2 36.88 6.4 293.26 1.2 2+3 6 50-100
Belfast, United Kingdom GBP sq.ft. p.a. 12.50 0.0 21.50 0.0 34.81 3.2 276.84 -3.2 5 6 6.25
Belgrade, Serbia EUR sq.m. p.m. 15.00 0.0 21.10 1.6 31.84 6.9 253.20 1.6 5 3 0
Berlin, Germany EUR sq.m. p.m. 22.50 2.3 26.00 2.0 39.23 7.3 312.00 2.0 5+5 1 30-350
Birmingham, United Kingdom GBP sq.ft. p.a. 28.50 0.0 43.70 0.3 70.76 3.5 562.69 -3.0 10y with 5y break
36 if 10y, 20 with 5y break
3.25-3.50
Bratislava, Slovakia EUR sq.m. p.m. 16.00 -5.9 25.47 -4.2 38.43 0.8 305.60 -4.2 5 2-8 200-500
Bristol, United Kingdom GBP sq.ft. p.a. 27.50 0.0 43.00 3.6 69.62 7.0 553.68 0.3 10y with 5y break
30 on a straight 10y, 15 if a break
at 5y
3.25-3.50
Brussels, Belgium EUR sq.m. p.a. 285.00 0.0 436.36 0.0 54.87 5.2 436.36 0.0 3/6/9 1 year secured 24-47
Bucharest, Romania EUR sq.m. p.m. 18.00 -5.3 23.40 -3.5 35.31 1.5 280.80 -3.5 3-5 4-6 20-60
Budapest, Hungary EUR sq.m. p.m. 20.00 0.0 26.89 0.0 40.57 5.2 322.67 0.0 3-4 4-8 170-200
Cape Town, South Africa ZAR sq.m. p.m. 145.44 N/A 169.44 N/A 19.15 N/A 158.22 3 1 1400
Copenhagen, Denmark DKK sq.m. p.a. 1,675.00 -1.5 2,505.88 -0.9 42.25 4.2 336.01 -1.0 3-5 (tenant) /5-10 (land-
lord)
0-6 0
Dubai, United Arab Emirates AED sq.ft. p.a. 280.00 0.0 340.00 0.0 92.56 0.0 736.11 -5.0 3 2 0
Dublin, Ireland EUR sq.m. p.a. 323.00 9.1 461.00 6.2 57.97 11.8 461.00 6.2 10 12 403.50
Durban, South Africa ZAR sq.m. p.m. 135.00 N/A 155.00 N/A 17.52 N/A 144.73 3 2 350-500
Edinburgh, United Kingdom GBP sq.ft. p.a. 28.00 3.7 45.00 2.3 72.86 5.6 579.43 -1.0 10 27 3.25-3.50
Frankfurt, Germany EUR sq.m. p.m. 38.00 0.0 46.24 0.0 69.77 5.2 554.84 0.0 5+5 3-6 50-350
Geneva, Switzerland CHF sq.m. p.a. 975.00 -2.5 1,040.00 -2.3 101.30 -3.8 836.97 -5.0 5 3 0
Glasgow, United Kingdom GBP sq.ft. p.a. 27.00 0.0 41.00 0.0 66.39 3.2 527.93 -3.2 10y with 5y break
30 (on a 10 year certain)
3.25-3.50
Gothenburg, Sweden SEK sq.m. p.a. 2,600.00 4.0 3,166.67 3.6 45.80 5.8 364.21 0.6 3 or 5 0-3 0
Hamburg, Germany EUR sq.m. p.m. 24.00 0.0 29.14 0.0 43.97 5.2 349.68 0.0 5+5 5-6 50-350
Helsinki, Finland EUR sq.m. p.a. 386.00 1.6 428.89 1.6 53.93 6.9 428.89 1.6 3-5 None 0-40
Istanbul, Turkey US$ sq.m. p.m. 45.00 4.7 77.84 4.8 86.78 4.8 690.14 -0.4 3-5 1-2 0
Jersey, United Kingdom GBP sq.ft. p.a. 32.00 0.0 37.75 -0.7 61.12 2.5 486.08 -3.9 15 12-18 3.25-3.50
Johannesburg, South Africa ZAR sq.m. p.m. 175.00 N/A 210.00 N/A 23.73 N/A 196.09 5-10 0 400
Figure 5: EMEA: Prime Office Occupancy Costs – Q3 2013
*Occupancy costs include service charges and taxes and are standardized on a net internal area basis.Source: CBRE Research, Q3 2013.
© 2013, CBRE, Inc.
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Location Prime Rent Total Occupancy Cost Local Currency/Measure*
Total Occupancy Cost US$*
Total Occupancy Cost Euro €*
Terms
Local currency/measure Current per local measure
% change12 months
Current per local measure
% change12 months
Current per sq. ft./annum
% change12 months
Currentper sq. m./annum
% change12 months
Typical lease term
(years)
Typical rent free (months)
Tenancy improvements (per local currency/
measure)
Leeds, United Kingdom GBP sq.ft. p.a. 25.00 4.2 39.00 5.4 63.15 8.8 502.17 2.0 10y with 5y break
12-30 months (on a 10y certain)
3.25-3.50
Lille, France EUR sq.m. p.a. 220.00 10.0 301.08 7.7 37.86 13.3 301.08 7.7 3/6/9 3/6 0
Lisbon, Portugal EUR sq.m. p.m. 18.50 0.0 24.73 0.0 37.31 5.2 296.70 0.0 5 5-7 0
Liverpool, United Kingdom GBP sq.ft. p.a. 19.50 -2.5 31.50 -1.6 51.00 1.6 405.60 -4.7 10y with 5y break
48 months on a 10 year, 24 with break at 5
3.25-3.50
London - Central (City), United Kingdom GBP sq.ft. p.a. 55.00 0.0 88.14 4.9 142.71 8.3 1,134.91 1.5 10 24 3.25-3.50
London - Central (West End), United Kingdom GBP sq.ft. p.a. 100.00 8.1 160.18 14.3 259.36 18.0 2,062.52 10.6 10 18-20 3.25-3.50
Lyon, France EUR sq.m. p.a. 300.00 5.3 400.00 4.2 50.30 9.6 400.00 4.2 3-6-9 4.5-6 0
Madrid, Spain EUR sq.m. p.m. 24.50 -3.9 35.00 -3.3 52.81 1.8 420.00 -3.3 3+2 3 50-150
Malaga, Spain EUR sq.m. p.m. 12.00 0.0 17.06 0.0 25.74 5.2 204.71 0.0 3+3 2 0
Manchester, United Kingdom GBP sq.ft. p.a. 30.00 0.0 45.00 1.1 72.86 4.4 579.43 -2.1 10 30 3.25-3.50
Marseille, France EUR sq.m. p.a. 270.00 8.0 360.22 6.3 45.30 11.9 360.22 6.3 3-6-9 3-6 0
Milan, Italy EUR sq.m. p.a. 480.00 -7.7 576.92 -7.1 72.55 -2.2 576.92 -7.1 6+6 8-12 0
Moscow, Russian Federation US$ sq.m. p.a. 1,200.00 0.0 1,776.63 0.0 165.05 -4.5 1,374.34 -5.0 3-5 0-3 0
Munich, Germany EUR sq.m. p.m. 32.00 1.6 39.34 1.4 57.14 2.7 472.09 1.4 5+5 3-6 50-350
Oporto, Portugal EUR sq.m. p.m. 12.00 -4.0 15.60 -3.4 23.55 1.6 187.25 -3.4 3 1-3 0
Oslo, Norway NOK sq.m. p.a. 3,900.00 8.3 4,333.33 8.3 66.93 3.1 532.28 -2.0 3-5 0-3 1000-5000
Palma de Mallorca, Spain EUR sq.m. p.m. 10.00 -13.0 13.81 -11.3 20.84 -6.7 165.74 -11.3 2+3 1 0
Paris, France EUR sq.m. p.a. 800.00 -3.6 970.97 -3.1 122.10 1.9 970.97 -3.1 3/6/9 7-17 0
Prague, Czech Republic EUR sq.m. p.m. 20.00 -4.8 32.11 -2.0 48.46 3.1 385.33 -2.0 5 5-10 50-70
Rome, Italy EUR sq.m. p.a. 400.00 -2.4 483.52 -2.2 60.80 2.9 483.52 -2.2 6+6 6 0
Rotterdam, Netherlands EUR sq.m. p.a. 220.00 4.8 281.11 3.2 35.35 8.6 281.11 3.2 5+5 12 or 24 "0
Sofia, Bulgaria EUR sq.m. p.m. 13.00 0.0 18.18 0.0 27.44 5.2 218.18 0.0 3-5 1-3 50-200
Southampton, United Kingdom GBP sq.ft. p.a. 18.00 0.0 29.50 0.9 47.77 4.1 379.85 -2.4 10y with 5y break
18-30 if straight 10y, 12 if break
at 5y
3.25-3.50
Stockholm, Sweden SEK sq.m. p.a. 4,400.00 0.0 5,388.89 0.0 76.16 -0.2 629.27 -1.5 3 or 5 0-3 0
Tel Aviv, Israel ILS sq.m. p.m. 110.00 -4.3 193.75 -3.1 58.70 3.2 484.99 1.9 3-5 none 0
Thessaloniki, Greece EUR sq.m. p.m. 10.50 0.0 15.43 0.0 23.28 5.2 185.16 0.0 12+4 2 0
Valencia, Spain EUR sq.m. p.m. 11.00 -12.0 17.27 -10.7 26.06 -6.0 207.25 -10.7 1+3 2-3 0
Vienna, Austria EUR sq.m. p.m. 25.00 2.0 30.00 0.0 45.27 5.2 360.00 0.0 5 3-6 150-250
Warsaw, Poland EUR sq.m. p.m. 26.00 -3.7 35.56 -3.0 53.65 2.0 426.67 -3.0 3-5 6-9 150-250
Zurich, Switzerland CHF sq.m. p.a. 850.00 0.0 890.00 0.0 91.44 3.9 727.20 -1.2 5 2-5 70-300
Figure 5: EMEA: Prime Office Occupancy Costs – Q3 2013
*Occupancy costs include service charges and taxes and are standardized on a net internal area basis.Source: CBRE Research, Q3 2013.
© 2013, CBRE, Inc.
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TERMS AND DEFINITIONS Global Prime Office Occupancy Costs provides a semi-annual snapshot of occupancy costs for prime office space throughout the world. Since office occupancy lease rates and expenses can vary substantively, not only across world markets but also within the same market area, this data is meant to provide comparative benchmarks only.
Comparative Office Occupancy CostsIn comparing international office cost quotations and leas-ing practices, the most common differences in reporting are the units of measure and currency, and how occupancy-related costs are reflected in quoted prime rents. For ex-ample, in the U.S., office units are measured in sq. ft., while Japan uses the tsubo. Great Britain quotes office rents 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 ongo-ing building maintenance.
Benchmarks For Measure, Currency and TermsTo facilitate comparisons across markets, Global Prime Office Occupancy Costs also reports local office occupancy costs in two common currencies, U.S. dollars in sq. ft. and euros in sq. m. Changes over the past 12 months are also reported in local currency, U.S. dollars and euros.
Explanation of ColumnsPercentage Change: Documents the rate of change in lo-cal rents over the preceding 12 months. When expressed in the local currency, they can vary dramatically from the euro and U.S. dollar-adjusted changes reported under Total Occupancy Cost.
Prime 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 ac-counting 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 per month,” and in Japan as “tsubo per month.” The ping, and tsubo are approximately 36 sq. ft. Each is the traditional measure of area in its respective country, based on the equivalent measurement of two tatami mats.
Total Occupancy Cost: Local office costs are reported in local currency, euros and U.S. dollars on a per annum ba-sis. This number reflects all occupancy costs, and therefore corresponds to “gross” rents for all markets. All occupancy cost figures are standardized to a net internal area basis of measurement.
Typical Lease Term, Typical Rent Free Period and Typical Tenancy Improvements: Typical lease term refers to the usual duration of contracted leases for prime office space in each respective market. 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. Tenancy Improvements is the typical allowance that a land-lord may make towards any fit-out costs and is reported in local currency/measurement.
© 2013, CBRE, Inc.
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CONTACTS
CBRE’s biannual Global Prime Office Occupancy Cost survey measures and compares office occupancy costs in 126 markets across the world. The survey is performed semi-annually in the first and third quarter of the year and is a collaborative effort among CBRE Global Research and Consulting around the world led by Andrea Walker. We would like to acknowledge Cynthia Chan, Zachary Gauge, Richard Holberton, Erik Nelson, and Roelof van Dijk for their contributions to the report.
GLOBAL RESEARCH AND CONSULTINGCBRE Global Research and Consulting is an integrated community of preeminent researchers and consultants who provide real estate market research, econometric forecasting, and corporate and public sector strategies to investors and occupiers around the globe.
Additional research produced by Global Research and Consulting can be found at www.cbre.com/researchgateway.
DISCLAIMER Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of the CBRE Global Chief Economist.
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Nick Axford, Ph.D. Global Head of Research Global Research and Consulting t: +852 2820 8198 e: [email protected] Follow Nick on Twitter: @NickAxford1
Neil Blake, Ph.D. Head of Research, UK and EMEA Global Research and Consulting t: +44 20 7182 2133 e: [email protected]
Peter Damesick, Ph.D. Chairman of EMEA Research Global Research and Consulting t: +44 20 7182 3163 e: [email protected] Follow Peter on Twitter: @cbre_uk_news
Brook Scott Interim Head of Research, Americas and Head of Occupier Research, Americas Global Research and Consulting t: +1 415 772 0337 e: [email protected]
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