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London retains position as world’s priciest office property rental market, report shows

In London’s West End, a preferred home for many hedge funds, media occupiers and government bodies, annual rents are $182.94 per square foot, the latest CB Richard Ellis Global Office Rents survey shows.
With average rents of $153.20 per square foot, Hong Kong’s Central Business District (CBD) has leapfrogged Tokyo’s Inner Central to second place ($143.99). Mumbai is now in fourth position, with average rents of $125.76 per square foot, just ahead of Moscow at $125.10 in the CBRE table which tracks occupancy costs for prime office space in 176 cities around the globe.
Midtown Manhattan is the most expensive in North America in 26th place with average costs of $64.51 a square foot. It has been losing ground to Far Eastern, Middle Eastern and Latin American markets since 2007, when it almost made the top 10.
The report also found on a year-on-year basis, global office rents were still falling, with the markets monitored revealing a collective drop of 4.6% in the year to the end of March.
Some 133 of the 176 markets saw a decline, with 33 of these markets registering double digit percentage point drops in office occupancy costs, reflecting a contraction in appetite for space during the deepest global recession seen in decades.
‘While economic data reflects improvements year over year, the commercial real estate market lags the economy, and our occupancy cost survey still shows falling costs,’ explained CBRE’s Global Chief Economist Raymond Torto.
‘On a quarter over quarter basis, rental data in these markets is generally starting to show a bottoming, and in some locations, such as London, even an uptick,’ Torto added.
The Latin American market was the only region to show a year on year jump in occupancy costs, with an average 3.4% increase over the 15 markets covered. Sao Paulo moved into the global top ten for the first time, after posting Latin America’s highest office occupancy costs at $100 per square foot.
The Asia Pacific region had the largest collective occupancy cost decline with a drop of 9.2% led by Singapore and Ho Chi Minh City where rents plunged by 36.2% and 30.9% respectively.
Overall, the EMEA region had an annual decline of 6.2% led by Moscow, Dublin and Abu Dhabi, where rents shrank by roughly a quarter each.