According to the company, the cost of renting prime office space in the City of London increased by close to a quarter during the past year or so and now stands at around £52 per sq ft.
Rents have also increased notably on prime office space in Hong Kong, where the economy is starting to get back on track after the global financial crisis.
CBRE suggests that in general terms, the office space available in major European and Asian cities has been increasingly in demand, while many of the biggest cities in America have continued to see demand decline.
However, rents in American cities are now believed to have reached the bottom of their downward cycle and places like Washington DC and New York can now expect to see demand for their rented office space start to pick up.
“More companies are looking to expand and net absorption is positive in a number of office markets this quarter, including Hong Kong, Washington DC and London’s City and West End districts,” explained Raymond Torto, global chief economist at CBRE.
“A change in the supply/demand balance means that most of the key markets in Europe and Asia are now showing some degree of rental growth. There is also an expectation that rental growth will accelerate over the coming months.”
An area of some 400,000 sq ft of grade A office space in London’s Docklands was recently opened by the Queen of England on behalf of the accountancy firm KPMG, which is to make the building in Canada Square its new international headquarters.
Editor’s notes: Data released in 2023 revealed that office space take-up through lettings deals in the City totalled 5.2 million square feet in 2022.
This figure was 23% higher than the levels recorded in 2021, however, it was 6% below the 10-year annual average of 5.7 million square feet.
The professional services sector accounted for 20% of the take-up, the technology, media, and telecom (TMT) sector made up 19% of the take-up and the banking and financial services sector made up 12% of the total take-up.
With the rounds of job cuts in the global TMT sector that have been going on since 2022 and the uncertainties in the US banking sector that have been present since the first quarter of 2023, it is expected that take-up in 2023 will not exceed that of 2022.
In 2022, prime office rents in the City were £72.50 per square foot per year.