London office market set to be the World’s priciest
A recent report indicated that even though global occupancy costs have fallen London has remained the world’s most expensive office market.
The report has come from CB Richard Ellis Group Inc., the world’s largest commercial property broker, and indicates that London’s West End has some of the highest priced office properties.
The report indicated that the city has held the top spot for 9 years, and that it shows no signs of being replaced.
Of the 176 markets surveyed, occupancy costs fell for 116 with the biggest declines in Singapore (by 36%) and Australia (by 27%). Yet London saw little movement at all and actual rental costs remain on average £121 a square foot.
Raymond Torto, chief economist for the firm, said, “I do think that market has started to stabilize. The real question is what’s the length of time it’s going to take to start to rebound?”
This will occur as more prime office space becomes occupied and landlords become stricter in their negotiations. This in turn makes finding the right property more and more difficult for businesses.
Michael Haddock, London head of CB Richard Ellis, said, “If you want 100,000 square feet, you have probably two or three choices in the City of London. [However] if you want 10,000 square feet, there’s no problem at all.”
The lack of space is made worse by the fact that there are fewer constructions commencing in the city.
However there are fears that these high prices can only be so high for so long and that eventually occupancy rates will fall and prices will crash.