# World's most expensive office locations



## Eastender (Feb 16, 2003)

*Hong Kong storms into the world's top three most expensive locations*
_Published date: 5 January 2006_

Hong Kong has soared up the global office occupancy costs league table and entered the top three most expensive office locations in the world, reveals global property adviser DTZ.



DTZ’s ninth annual Global Office Occupancy Costs survey, published today, is a guide to accommodation costs in major prime office locations covering 117 business districts in 46 countries worldwide. Ranking for the 2006 survey is focused on a per workstation basis to better reflect the costs of accommodation. For comparative purposes all total office occupancy costs are displayed in US dollars.



London (West End) maintained its pole position in the global ranking for the sixth consecutive year with occupancy costs of US$18,740 per workstation pa. Actual office occupancy costs have risen by 5.6% however, due to exchange rate differences between the US dollar and pounds sterling, this report shows a slight drop of 3% year on year 2005/06.



Washington DC climbed two spaces to become the second most expensive location with occupancy costs of US$15,370.



The most notable finding was the emergence of Hong Kong, which posted its largest increase over the past decade, 61% to US$15,000 per workstation pa and climbed an impressive 13 places to become the world’s third most expensive location. This increase has been driven by the positive take-up and business sentiment, especially by investment banks, with a greater willingness to pay for better quality offices. However, the fundamental reason for Hong Kong's surge up the table is due to the lack of available new Grade A office buildings coming onto the market.



Top ten most expensive office locations by occupancy costs in the 2006 survey:



*1. London (West End)
2. Washington DC
3. Hong Kong
4. Paris
5. London (City)
6. Frankfurt
7. New York (Midtown)
8. Dublin
9. Tokyo (Central)
10. Luxembourg
*


India has one of the fastest growing economies in the world and a rapidly expanding real estate market, which is fuelling a surge in office occupancy costs across the country. The continued demand for space from the IT/IT-enabled services and business process outsourcing sectors is the main driver behind the growth in costs. The main beneficiary is Bangalore, which is fast becoming an established destination with large occupiers seeking consolidation and large built-to-suit facilities. However the largest increases in the 2006 survey have been recorded at Mumbai and New Delhi, which saw year on year growth of 27% and 29% respectively and now rank 20th and 43rd in the global league table.



Dubai also saw the second biggest increase in occupancy costs – up 50% to US$7,180 triggering a rise of 38 places to claim the 37th position and surpassing Riyadh to claim the third most expensive region in the Middle East, behind Doha and Kuwait City (included for the first time this year). This is a trend that DTZ Research anticipates to continue throughout 2006 due to undersupply despite the brisk development underway.



In Western Europe, London (West End), Paris and London (City) remained the top three expensive locations in Europe for the second year running, however all three locations experienced a decline in costs. This is a trend mirrored across the most of Western Europe primarily due to the depreciation of the Euro in comparison to the US dollar.



A similar picture can be seen across Central & Eastern Europe, which remained relatively flat in comparison to the findings from the 2005 survey. Marginal increases were only posted in Budapest and Kiev (13% and 15% respectively) as a result of steadily increasing demand combined with the continued deficit of high quality space in each market.



Joe Valente, Head of DTZ Research, comments: "One of the most notable themes arising from this year's survey is the growing evidence of a recovery of the major leasing markets throughout the world. The outlook for global office leasing markets is positive with the recovery gaining momentum in part because of the rise in demand from key sectors as well as the lack of supply of good quality stock. However, it is likely that the current rental cycle will peak in 2008/2009."



source: DTZ Holdings plc

http://www.dtz.com/portal/site/Glob...toid=f230352dd7598010VgnVCM1000000e01a8c0RCRD


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## London_2006 (Feb 9, 2003)

The City has dropped quite a lot! Wasn't it 1st last year, with the West End 2nd?


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## krull (Oct 8, 2005)

No surprice New York City (Midtown) is #7... there is so much competition with better cheaper rents from other places close by. Downtown, Jersey City, Long Island, Downtown Brooklyn, Conneticut and the suburbs.

Other cities lack such compettion close by.


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## Nouvellecosse (Jun 4, 2005)

And how expensive is Lower Manhattan? I would have expected demand to be quite high considering it lost a lot of space on 9/11.


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## mr_storms (Oct 29, 2005)

Im surprised to see DC #2, I would have though midtown NYC to be more expensive


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## Minato ku (Aug 9, 2005)

Paris 4th position :shocked: 

but any offices buildings are empty and much are in construction.


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## wjfox (Nov 1, 2002)

Doesn't surprise me that London is #1... prices are insane in this city.


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## maxpowers20 (Jun 4, 2004)

It seems low rise cities pay a price for not having skyscrapers, and the increased floor space they bring! London, Paris and Washington are probably the 3 biggest, flattest cities (if that makes sense!), and here they are on the list. 

Dublin? I didn't know there was much of a demand for office space there! Suprising!


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## hkskyline (Sep 13, 2002)

*Hong Kong Office rents to peak by late 2007 *

Office rents are likely to peak in the third quarter of 2007 and tail off during 2008 as supply increases, real estate consultant Knight Frank says.

Raymond Wang
Hong Kong Standard
Tuesday, January 03, 2006

Office rents are likely to peak in the third quarter of 2007 and tail off during 2008 as supply increases, real estate consultant Knight Frank says.

"With new supply of major developments limited up until 2007, larger tenants that wish to secure substantial amounts of Grade A office space are securing transactions at least 10 to 12 months ahead," said Mark Bernard, Knight Frank's executive director.

The only major Grade A office development under way on Hong Kong Island, Swire Properties' 18 Westlands Road in Quarry Bay, won't be available until 2008. The 68-story project will comprise over 1.65 million square feet.

Its major competition will be Sun Hung Kai's International Commerce Centre, a 2.4 million sqft development atop the MTRC's Kowloon Station, Knight Frank said. The initial phase of International Commerce Centre, comprising 450,000 sqft of office space between the 10th and 22nd floors, is due for completion by the end of 2007.

The entire project, which will also include two six-star hotels, luxury residences, serviced apartments and retail space, is due for completion in 2010.

Bernard said there are so few sizable rental opportunities on the horizon in the next two years that tenants with large needs are signing agreements on premises before they become vacant.

Much of the action currently revolves around the 120,000 sqft at Central district's Wing On Centre that accounting firm Deloitte will free up when it relocates to new offices at One Pacific Place.

"Most of the new office supply in the coming 12 months will be concentrated in Kowloon Bay - buildings such as Enterprise Square 5 and 668 Wang Tai Road, which will be completed in late 2006 and early 2007 respectively," said Bernard. "Supply in core districts in the next two years will be very limited."

The only new Grade A supply imminent in Central is Hongkong Land's 114,000 sqft Landmark Extension, expected to be ready late this year.

Pacific Century Insurance has now agreed to a contract giving it nine floors and naming rights at Central's Wing On Centre, one of the largest office leasing transactions in the past 18 months, Knight Frank said. The insurance company will take up floors 17 to 20, 22 and 23 and 26 to 28, a total of 180,000 sqft, plus 50 parking spaces in the basement. It will sign a six-year contract with a three-year renewal clause.

Office rents in the Central core rose 8.4 percent month-on-month in November, meaning that average rents for prime offices now are 3 percent higher than the previous market peak of October 1997, Knight Frank said.

Rents in the Central core averaged HK$68.55 per square foot per month in November. In Quarry Bay, average office rents increased 7.6 percent to HK$24.42 per square foot per month.

Overall, according to property consultants CBRichard Ellis, Grade A office rents and sale prices increased 57.7 percent and 12.8 percent, respectively, in the first 11 months of 2005.

The vacancy rate in prime areas was 4.6 percent in November.

Robust demand for space for both immediate use and future expansion is being seen from financial services companies, according to Alan Lok, senior director of office services at CBRichard Ellis.

Shrinking availability of office supply, particularly in Central, has caused the spread between prime and non-core Grade A rents to widen, he said.

On the other hand, buyer resistance to rising sale prices and interest rates began to strengthen in the third quarter, leading to consolidation in the office sales market.

Nevertheless, CBRichard Ellis expects both office rents and sale prices to continue their climb, rising 20 percent and 10 percent, respectively, during 2006.


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## Mekky II (Oct 29, 2003)

maxpowers20 said:


> It seems low rise cities pay a price for not having skyscrapers, and the increased floor space they bring! London, Paris and Washington are probably the 3 biggest, flattest cities (if that makes sense!), and here they are on the list.
> 
> Dublin? I didn't know there was much of a demand for office space there! Suprising!


Ireland is today one of IT technology leading countries, Intel Europe is based in Dublin !


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## Manila-X (Jul 28, 2005)

Definitely HK where the city serves as Asia's financial centre! I wouldn't doubt office space would be expensive in that city.


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## krull (Oct 8, 2005)

Here is a recent article about NYC...

*New York bulls**
How Wall Street is lifting the city * 


January 02, 2006 

Manhattan is back.

For the past several years, net job performance in the outer boroughs beat Manhattan's numbers. But in 2006, the city's center will again lead the economy.

Economists expect that New York will add 40,000 to 50,000 jobs this year, compared with about 35,000 jobs created in 2005. About half of the gains in '06 will be in white-collar positions, which are concentrated in Manhattan. 

For the city as a whole, 2006 will probably be the third straight year of solid growth, with New York regaining about 100,000 of the 237,000 jobs that were lost in the recession of 2000 to 2003.

The moderately strong forecast in the financial sector is especially auspicious: What's good for Wall Street is good for New York. 

Securities industry and business services jobs bring in billions of dollars and enliven all areas of the city's economy. The 170,000 securities industry jobs--expected to grow 3% in 2006--pay an average salary of $270,000. Those workers pump money into restaurants, stores and residential real estate. 


*Revved up *  


Wall Street bonuses jumped 15% last year. They will "boost Manhattan and the city into fourth gear," says Rae Rosen, a senior economist at the Federal Reserve Bank of New York.

Financial firms' earnings were up 15% in 2005, to $23.7 billion, according to the Securities Industry Association. Mergers and acquisitions, one area that's been a bit sluggish, will pick up steam during 2006. Prime brokerage, proprietary trading and structured finance, already very strong, will maintain their solid performance. 

"Those are the areas that are doing well, and it's likely that that is where the biggest growth is going to continue to be," says Frank Fernandez, SIA's director of research.

The financial sector's success will generate more work for big law, accounting and consulting firms and small service businesses.

"Wall Street is gaining momentum, and that means there's going to be more hiring in the biggest, most important areas of the legal profession in New York: general corporate and mergers and acquisition work," says Jack Zaremski, president of Hanover Legal Personnel Services Inc.

At ACC Construction in Queens, which specializes in office interiors, Wall Street will account for 25% of the contractor's business in the first half of 2006, up from 10% under way at the end of last year, says ACC's president, Michele Medaglia.

"We are definitely seeing an increase in activity, ranging from small hedge funds setting up trading desks to large banks seeking 20,000 to 30,000 square feet," Ms. Medaglia says. 


*Class A space race *  


The surge in white-collar jobs and the limited number of properties coming into inventory is such a potent combination that Manhattan's famously expensive Class A office space will command an even higher premium. Robert Sammons, economist with Colliers ABR Inc., expects Class A vacancies to drop to about 5%, from the current 7.7%. That tightening will in turn boost the price of such real estate in midtown almost 19%, to about $70 a square foot.

Manhattan's white-collar businesses won't hog all the job growth, though. Sectors influenced largely by demographics and well-represented elsewhere, including social services and health care, will keep up their long-term expansion. 

Of course, not all sectors will perform well. The 55,000-employee insurance industry has been battered for a decade as companies moved back-office operations to cheaper regions. Recent legal and regulatory problems at the largest New York firms, including Marsh & McLennan Cos. and American International Group Inc., haven't helped.

The diverse, 161,000-employee media sector will remain sluggish in 2006. Newspapers and publishers will lose more ground to the Internet, and the number of telecommunications jobs will continue to drop as operations are relocated to less costly areas or are automated.

Even with those few dark spots, the broader city economy will show strength because of a revitalized Manhattan. Barbara Byrne Denham, an economist with Jones Lang LaSalle, says, "The dog is wagging the tail."


©2005 Crain Communications Inc.


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## krull (Oct 8, 2005)

Nouvellecosse said:


> And how expensive is Lower Manhattan? I would have expected demand to be quite high considering it lost a lot of space on 9/11.



*Financial firms skip downtown
Hugely cheaper rents fail to draw banks; revival hinges on area's rebuilding *


By Julie Satow 
Published on January 09, 2006 

A surge in new office leases signed by financial services firms last year all but bypassed the one neighborhood that most used to call home--Wall Street and environs. 

In a year of rising revenues and record earnings, *71 financial firms signed new leases, according to data compiled by Crain's, but only three of them opted to rent downtown.* 

Some real estate brokers say that the situation has grown so grim that they no longer even bother to show downtown space to financial tenants. Beginning after the terrorist attack of Sept. 11, the lack of interest continued through last year, despite a huge gap between downtown and midtown rents. 

*"If tenants who are in midtown want a cheaper location, they'll go to midtown south before they'll go downtown," *says Robert Stella, executive vice president at brokerage firm Cresa Partners. 

Rather than give up on downtown totally, however, most brokers simply advise that the area's revival will happen slowly, as the World Trade Center site is filled with new museums, shops and offices. 

In a major endorsement of that view, last year Goldman Sachs unveiled plans to build a new $2 billion headquarters in Battery Park City. 

Meanwhile, across the street, ground was at last broken for a new PATH station and a new Fulton Street Transit Hub. 


*Light at end *


"I'm confident that we are on the verge of a resurgence downtown, if it hasn't already begun," says Carl Weisbrod, president of Trinity Real Estate, a large landholder in lower Manhattan. 

But as for last year, the record speaks for itself. *The three firms that did expand downtown in 2005--Morgan Stanley, American Express and Goldman Sachs--already had large offices in the area. All told, the trio leased nearly 377,000 square feet.* 

While that number is impressive,* it still amounted to less than 10% of the 4.3 million square feet of new leases signed by the financial services industry in the city last year.* 

Even worse, in the largest of the deals, Morgan Stanley merely replaced another financial services firm, Wachovia, which had vacated 222,000 square feet at 1 New York Plaza.

In contrast, a robust midtown market continued to draw large numbers of financial services firms, many looking for big blocks of space. The biggest expansions were notched by Citigroup, which added more than 700,000 square feet, and Bank of America, which took an additional 300,000 square feet. 

With a rent differential between midtown and downtown that has now yawned to as much as 50%, up from 30% before Sept. 11, many brokers had expected to see more banks swing their sights southward. *A year-end report by CB Richard Ellis found that the average rent in midtown was $52.64 a square foot, compared with $34.91 for downtown.*

"It is not just rent that tenants consider when looking at office space," says Mr. Stella, who adds that other factors, such as longer travel time, are weighed. 


*Prospects on hold *


At this point, many brokers say that downtown's prospects of returning to favor with financial firms are still dim. First, new construction must fill the large holes in the downtown landscape. 

In the meantime, they note, *there is plenty of space in midtown. At least 14 buildings there have blocks of space of 150,000 square feet or more available*, according to data from Newmark Knight Frank.

"It isn't like there are only three places these firms can go," says Neil Goldmacher, an executive vice president at Newmark. 


©2005 Crain Communications Inc.


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## Nouvellecosse (Jun 4, 2005)

^ Very interesting...


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## BermudaTriangle (Jan 14, 2006)

"Tokyo Central"? That is abstract. Do you mean Chiyoda, Chuo and Minato wards altogether and thus taking the average out of them? I want to know more precise location of which part of Tokyo this survey is all about just like West End, City, Midtown, etc.


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## Tom_Green (Sep 4, 2004)

Frankfurt is on the 6th place. That`s so stupid. 
We have 2mio m² of empty offices in the city but the city is still so expensive.


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## Phil (Aug 23, 2002)

minato ku said:


> Paris 4th position :shocked:
> 
> but any offices buildings are empty and much are in construction.


bullshit. The vacancy rate in Paris and IDF is low, about 6%.


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## London (Jun 12, 2005)

City of London has the highest in the world :yes:


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## wjfox (Nov 1, 2002)

London said:


> City of London has the highest in the world :yes:


Wrong.

The West End of London has the highest in the world.


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## Phil (Aug 23, 2002)

London said:


> City of London has the highest in the world :yes:


Did you even read the thread ? :bash:

Btw, It kinda looks like you talk about the vacancy rate


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