While Mumbai dropped to sixth position, Tokyo?s Inner Central District has supplanted London?s West End as the world?s most expensive office market, according to CB Richard Ellis Group, Inc Global Research and Consulting?s semi-annual Global Office Occupancy Costs survey. As per the survey, London?s West End, is now the world?s second most expensive office market, followed by Moscow, Hong Kong?s Central Business District or CBD, and Tokyo?s Outer Central District in the CBRE report, which tracks office occupancy costs in more than 170 cities around the globe.
According to Anshuman Magazine, chairman & managing director, CB Richard Ellis South Asia, ?This ranking highlights the decrease in rentals we have witnessed in the last six months due to a reduction in demand. However, Mumbai continuing to be in the top 10 and Delhi being at 12th place reflects the shortage of prime office supply in India. To reduce office occupancy costs further and facilitate more supply of office space we need to urgently improve our infrastructure and amenities. This would bring our world rankings down further and make India more competitive.?
Financial centers have been most significantly affected by declining occupier demand and, as one would expect, registered the most material decreases in office rents. In many cases, major global office markets have seen occupancy costs fall by 20% or more over the last 12 months. Across the 170 cities as a whole, office occupancy costs fell 2.8% over the 12 month period ending March 31, 2009 (on an un-weighted average basis) compared with an increase of 8.0% in the 12 month period ending September 30, 2008 Singapore had the largest year over year decrease in occupancy costs with a drop of 34%.
Some markets did record increases in costs over the last 12 months but these markets?such as Charlotte (U.S.), Marseille (France) and Perth (Australia)?are very much the exception rather than the rule. Generally, these 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 previously, 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 around the globe, according to the CBRE report.
?The great global recession has clearly taken its toll on the world?s office markets, particularly those with significant concentrations of financial industry employers,? said Dr Raymond Torto, CBRE?s Global Chief Economist. ?The most expensive office markets, as measured in dollars, are considerably less expensive than a year ago and occupiers are now in a strong position to procure prime space at attractive costs. For instance, a year ago office space in London?s West end was nearly $300 per sq. ft., while today that space goes for $172 per sq. ft.?