HK Most Expensive Office Market

Gordana Davila

January 9, 2013

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According to CBRE Global Research and Consulting’s semi-annual Prime Office Occupancy Costs survey, the dominance of Asia-Pacific in the top 10 most expensive business locations worldwide continued, led by Hong Kong-Central – the world’s most expensive market — and five other Asian markets. However it was a U.S. market, San Francisco (Downtown), that had the strongest year-over-year increase in prime office occupancy costs with a 36.4% rise driven by that market’s hot technology sector.

Hong Kong Central led the “most expensive” list with overall occupancy costs of US$246.30 per sq. ft. per year. This topped London’s West End, which had total occupancy costs of  US$219.81. Tokyo (Marunouchi Otemachi) was the third most expensive market for office space, followed by Beijing’s CBD and New Delhi’s CBD. Other Asia-Pacific markets in the top ten include Beijing-Finance Street (6th) and Hong Kong-West Kowloon (7th).

Despite economic headwinds, occupancy costs increased by an average of 2.1% worldwide over the past year, led by the Americas with a 5.2% annual increase and Asia Pacific with a 2.6% increase. EMEA continued to be hindered by economic recession in much of Europe and recorded a 0.4% decrease in prime occupancy costs. Prime office occupancy costs increased in 74 markets, decreased in 37 office markets and had no change in 22 markets.

“The global office market recovery cooled over the past year, hampered by the ongoing European debt crisis, a deceleration of growth in emerging markets and ubiquitous uncertainty created by the ‘fiscal cliff’ in the U.S.,” said Dr. Raymond Torto, CBRE’s Global Chief Economist. “However, tight market conditions, strong demand for high quality space and low levels of new construction continue to drive up occupancy costs in many prime office markets across the globe.”

CBRE tracks occupancy costs for prime office space in 133 markets around the globe. Of the top 50 “most expensive” markets, 19 are in EMEA, 18 are in Asia-Pacific and 13 in the Americas.

While comparisons in dollars are affected by currency exchange rates, annual percent change calculations are based upon occupancy costs in local currency and not influenced by currency changes.

Asia Pacific

Asia Pacific had 18 markets ranked in the top 50 most expensive, with four of the top five—Hong Kong-Central, Tokyo (Marunouchi Otemachi), Beijing CBD and New Delhi’s Connaught Place CBD. Hong Kong Central’s position as the most expensive office market continued to be driven by limited new supply and tight market conditions. Despite its most-expensive ranking, Hong Kong Central experienced the largest annual decrease worldwide (-17.8%) as cost-cutting among large financial institutions and big banks dramatically lowered prime office occupancy costs. The most expensive market in the global ranking from the Pacific Region was Sydney (US$119.04 per sq. ft.), which came in at 14th.

Americas

North America is led by New York’s Midtown, which posted an office occupancy cost of US$114.30 per sq. ft., on the strength of a 7.3% year-over-year increase. The New York Midtown market was ranked 16th globally.

San Francisco (Downtown) experienced the largest year-over-year increase, at 36.4%, of the 133 markets tracked with an occupancy cost of $90.00 per sq. ft. San Francisco’s Peninsula market was not far behind, rising 28.6% to reach $62.10 per sq. ft. Many of the markets with the largest increases in prime occupancy costs have seen strong demand from the energy, automotive or high-tech sectors, as well as low vacancies and limited prospects for new supply. As a result, occupancy costs have increased rapidly in San Francisco, Seattle (Suburban), Calgary (Downtown), Vancouver (Downtown), Denver (Downtown) and Houston (Suburban).

In Latin America, São Paulo remains the most expensive market, posting an office occupancy cost of US$130.07 per sq. ft., and ranks as the 10th most expensive market globally. Meanwhile, with an occupancy cost of $121.40 per sq. ft., Rio de Janeiro is also in the top 12.

Europe Middle East & Africa (EMEA)

In addition to London’s West End ranking as the world’s second-most expensive market, other markets in the region that top the list are Moscow (occupancy cost of US$172.82 per sq. ft.) and London’s City (US$131.76 per sq. ft.).

Continuing economic contraction in the euro zone led to double-digit or near-double-digit declines in prime occupancy costs in Thessaloniki and Athens, Greece, and Malaga, Spain, as business sentiment suffered and occupiers remained cautious. Subdued demand also led to occupancy cost declines in Portugal and Ireland.

Top Ten Most Expensive Markets (In US$ per sq. ft. per annum)

Rank

Market

Occ. Cost

1

Hong Kong (Central), Hong Kong 246.30

2

London – Central (West End), United Kingdom 219.81

3

Tokyo (Marunouchi Otemachi), Japan 197.27

4

Beijing (CBD), China 184.95

5

New Delhi (Connaught Place – CBD), India 183.3

6

Beijing (Finance Street), China 179.57

7

Hong Kong (West Kowloon), Hong Kong 174.13

8

Moscow, Russian Federation 172.82

9

London – Central (City), United Kingdom 131.76

10

São Paulo, Brazil 130.07

Largest Annual Changes

Occupancy Costs (In local currency & measure)

Top 5 Increases

Rank

Market

% Change

1

San Francisco (Downtown), U.S. 36.4

2

Jakarta, Indonesia 28.7

3

San Francisco (Peninsula), U.S. 28.6

4

Seattle (Suburban), U.S. 21.8

5

Beijing (Finance Street), China 19.7

Top 5 Decreases

Rank

Market

% Change

1

Hong Kong (Central), Hong Kong -17.8

2

Singapore, Singapore -17.7

3

Thessaloniki, Greece -14.8

4

Malaga, Spain -10.8

5

Athens, Greece -9.5

Top 50 Most Expensive Office Markets as of September 30, 2012

Rank

Market

Occ. Cost (US$)

1

Hong Kong (Central), Hong Kong 246.3

2

London – Central (West End), United Kingdom 219.81

3

Tokyo (Marunouchi Otemachi), Japan 197.27

4

Beijing (CBD), China 184.95

5

New Delhi (Connaught Place – CBD), India 183.3

6

Beijing (Finance Street), China 179.57

7

Hong Kong (West Kowloon), Hong Kong 174.13

8

Moscow, Russian Federation 172.82

9

London – Central (City), United Kingdom 131.76

10

São Paulo, Brazil 130.07

11

Mumbai (Bandra Kurla Complex), India 122.19

12

Rio de Janeiro, Brazil 121.4

13

Paris Ile-de-France, France 119.78

14

Sydney, Australia 119.04

15

Shanghai (Pudong), China 116.36

16

New York (Midtown Manhattan), U.S. 114.30

17

Shanghai (Puxi), China 108.25

18

Geneva, Switzerland 105.28

19

Singapore, Singapore 104.66

20

Perth, Australia 96.91

21

Caracas, Venezuela 95.68

22

Washington, DC (Downtown), U.S. 94.51

23

Dubai, United Arab Emirates 92.56

24

Seoul (CBD), South Korea 91.28

25

Mumbai (Nariman Point – CBD), India 90.80

26

San Francisco (Downtown), U.S. 90.00

27

Zurich, Switzerland 87.98

28

Boston (Downtown), U.S. 87.50

29

Istanbul, Turkey 82.78

30

Brisbane, Australia 79.04

31

Luxembourg City, Luxembourg 77.94

32

Los Angeles (Suburban), U.S. 76.84

33

Stockholm, Sweden 76.35

34

New York (Downtown Manhattan), U.S. 74.93

35

Seoul (Yeouido), South Korea 74.27

36

Milan, Italy 74.21

37

Guangzhou, China 72.88

38

Bogota, Colombia 70.76

39

Calgary (Downtown), Canada 70.59

40

Aberdeen, United Kingdom 70.20

41

Manchester, United Kingdom 69.80

42

Edinburgh, United Kingdom 69.02

43

Taipei, Taiwan 68.57

44

Birmingham, United Kingdom 68.36

45

Toronto (Downtown), Canada 68.00

46

Vancouver (Downtown), Canada 67.20

47

Frankfurt am Main, Germany 66.31

48

Bristol, United Kingdom 65.10

49

Oslo, Norway 64.91

50

Glasgow, United Kingdom 64.31

Source: CBRE Global Research and Consulting

1.The Prime Office Occupancy Costs report is a survey of office occupancy costs for prime office space in 133 cities worldwide.

2. The latest survey provides data on office rents and occupancy costs as of September 30, 2012.

3. The Largest Annual Changes rankings are based upon occupancy costs in local currency and measure. The Most Expensive ranking is based upon occupancy costs in US$ per sq. ft. per annum.

4. The figures given in this release refer to occupancy cost. This represents rent, plus local taxes and service charges. The occupation cost figures have also been adjusted to reflect different measurement practices from market to market.

5. Due to methodology changes comparisons with figures in previously released reports are not valid.

Gordana Davila

January 9, 2013

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Acerca de Lucas Vargas:

  • Empezó en Grupo ZAP como el VP de Sales y en 2016 cuando la empresa tenía 60 empleados. Fue nombrado COO de VivaReal tomando el mando de Brian Requarth el Co-Fundador. VivaReal lanzó en Colombia y se trasladó a Brasil. En 2017 se hizo CEO del Grupo ZAP.
  • Ha trabajado en Mexico en PWC y en el Banco Santander
  • Tiene un Master de Business Administration de Harvard
  • En noviembre este año después de la fusión de OLX Brasil y Grupo ZAP fue nombrado el CEO del OLX Business Unit. Lidera la empresa junto con Andries Oudshoorn y Marcos Leite
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