West End regains title as world’s most expensive office space
London’s West End has knocked Tokyo off the top of the list to regain the title of the world’s most expensive office space.
DTZ has said stabilising rents and business confidence has pushed the West End back up to the top spot, beating Dubai, Tokyo and Paris. The result comes as part of DTZ’s Global Occupancy Costs Survey and the firm predicts the West End will hold onto this title until at least 2013. The West End was named as the most expensive business district from 2002-2008 when it was pushed down to 5th place as the recession took hold. The pound’s current strength against the dollar is also believed to have had a major impact on the rankings.
The survey collects data from 116 business districts in 47 countries and assesses the major occupancy costs in key offices around the world.
Not all areas fared as well as the West End though. Singapore and Kiev saw occupancy rates bomb to 51% year-on-year. Moscow also suffered a huge loss, dropping from 11th place to 36th place, while both Paris and Dubai dropped out of the top 5. New entrants into the top 10 include Zurich (8), Boston (9) and Frankfurt (10) whose markets all benefited from moderate rental declines.
DTZ have forecast that occupancy costs will be fairly muted over the next 3 years – this is in contrast to the strong growth in occupancy costs that we’ve experienced in the last few years. Asia Pacific are predicted to have the strongest growth in the next few years and already has 3 regions in the top 5: Hong Kong, Guangzhou and Bengaluru.
“In the current market, new occupiers will benefit from a wider and better pool of properties to choose from. As occupancy costs in prime locations become more affordable and space more available, a larger number of occupiers will be able to consider buildings in prime locations,” said Karine Woodford, Head of Real Estate Strategy at DTZ. “Indeed, the silver lining for tenants actively looking for office space is that they may find rents quickly dropping to levels they cannot resist.”