A number of cities in the Asia Pacific region have managed to gain ground on the UK capital in terms of grade A office space pricing but London’s West End remains on top.
The cost of occupying office space in the West End of London is currently running at around £120 per square foot, with similar space in the City of London at roughly £77 per square foot.
Only the West End and Moscow have office space more expensive than ‘the City’ in what CBRE refers to as the Europe, Middle East and African market, with Paris and Dubai making up the top five in that particular category.
Meanwhile, in the Asia Pacific region, a number of well-known markets have seen rises in the price per square foot of its office space to rent, most notably Hong Kong, Tokyo and Mumbai’s CBD around Nariman Point, which came in second, and third and fourth respectively in the global list of most expensive office space markets.
CBRE’s global chief economist Dr Raymond Torto said: “Major markets in emerging economies feature prominently at the top of the list of most expensive office costs. This pattern developed just a few years ago and it is more pronounced today.”
A report from Colliers International this week suggested that confidence is returning to office space markets around the world, with 90 per cent of real estate investors considering the best options for expanding their portfolios. Office space opportunities in Kiev, Warsaw and Sao Paulo were cited as being among the most attractive emerging market prospects, Colliers noted.
Editor’s notes: In 2022, prime office rents in the West End of London reached £130 per square foot per year and prime rents in the City of London reached £72.50 per square foot.
It is expected that rents in these areas for the very best space will grow over the next 5 years, however, as of May 2023, growth expectations for the short term have been scaled back somewhat due to uncertainties in the markets caused by the war in Ukraine, energy uncertainties, supply chain issues, rising interest rates, high inflation, layoffs in the tech and other sectors and the crises banking institutions are facing in the US.
Incidentally, according to commercial real estate firm JLL’s Premium Office Rent Tracker (PORT), Hong Kong’s Central district was the most expensive location to rent office space in 2022 with rents reaching the equivalent of £206 per square foot per year (inclusive of all occupancy costs).
New York’s Midtown district was the second most expensive area to rent office space with prime rents reaching the equivalent of £175 per square foot.
London’s West End district was the third most expensive area to rent office space in 2022 with prime rents topping out at £145 per square foot.