West end offices top 18th February 2014

London’s West End is the world’s most expensive office market for the second year in a row, retaining its title ahead of runner-up Hong Kong, according to research published in Cushman & Wakefield’s annual Office Space Across the World report.

Characterised by strong demand and a dwindling supply of high quality space, the West End of London saw office rents increase by 5% in 2013.

Furthermore, with rents largely unchanged in Hong Kong Central over the year, the gap in total occupancy costs between the two cities has widened. “London remains attractive for many international businesses as its global appeal continues to grow. With prime space at a premium in the West End and a steady demand for offices from across all sectors, significant rental growth can be anticipated in 2014,” said Digby Flower, Cushman & Wakefield’s UK chief executive and head of London markets.

Global office rents moved up by 3% in 2013, the third consecutive year of similar rental performance, while all three regions overall witnessed a relatively slow pace of rental growth over the year. However, certain areas – such as Africa and the Middle East – saw a more buoyant rental market, with prime rents up by as much as 10% in certain locations.

Moscow’s central business district (CBD) surged from sixth position in last year’s ranking to third, with rents holding firm over the last 12 months as occupier demand remained consistent. Meanwhile, rental growth was predominantly flat across Asia Pacific with Beijing, Tokyo and New Delhi’s Connaught Place mostly stable over the year. 

However, Connaught Place fell from fourth position to eighth due to an appreciation in both the US dollar and euro against the Indian rupee in 2013; this caused a shift in New Delhi’s position in terms of global occupancy costs when measured on a dollar or euro basis.

Top 10 most expensive locations by country 2013 rank 2014 rank country city location occupancy cost (€/sq.m/year);

1 UK London West End 2,122

2 Hong Kong Hong Kong Central 1,432

3 Russia Moscow CBD 1,092

4 China Beijing CBD 1,027

5 Japan Tokyo CBD (5 Central Wards) 1,003

6 USA New York Midtown (Madison/5th Av.) 993

7 Brazil Rio de Janeiro Zona Sul 991

8 India New Delhi Connaught Place 959

9 France Paris CBD 895

10 Australia Sydney CBD 844