CBRE: Hong Kong (Central) and London’s West End remained the two most expensive office locations in the world

Los Angeles, 2017-Jun-20 — /EPR Retail News/ — Hong Kong (Central) and London’s West End topped the list of prime office occupancy costs again, according to CBRE Research’s latest annual Global Prime Office Occupancy Costs report.

Hong Kong (Central) and London’s West End remained the two most expensive office locations in the world. Hong Kong’s (Central) overall prime occupancy costs of US$303 per sq. ft. per year topped the “most expensive” list, followed by London’s West End (US$214 per sq. ft.), New York (Midtown) (US$203 per sq. ft.), Hong Kong (West Kowloon) (US$190 per sq. ft.) and Beijing (Central Business District (CBD)) (US$183 per sq. ft.).

“The global top-10 list reflects the ongoing strength of global gateway cities in attracting and maintaining a successful occupier base,” said Richard Barkham, global chief economist, CBRE.

Global prime office occupancy costs—which reflect rent, plus local taxes and service charges for the highest-quality, “prime” office properties—rose 1.9 percent year-over-year, with the Americas up 3.6 percent, EMEA up 0.8 percent and Asia Pacific up 1.2 percent.

Durban (South Africa) had the highest increase in occupancy cost overall, though Stockholm (Sweden) registered some of the fastest growth in Europe, along with Palma de Mallorca (Spain), Belfast (U.K.) and Amsterdam (Netherlands). In Asia Pacific, Shanghai (Puxi) in China had the highest growth in occupancy cost, followed by Guangzhou, Bangalore and Shanghai (Pudong). Buenos Aires showed the biggest increase in the Americas overall, while suburban Denver, suburban Houston and New York Midtown South saw the largest occupancy-cost increases in the U.S.

CBRE tracks occupancy costs for prime office space in 121 markets around the globe. Of the top 50 “most expensive” markets, 21 were in Asia Pacific, 16 were in EMEA and 13 were in the Americas.

Europe Middle East & Africa (EMEA)

In EMEA, Durban (South Africa) had the highest increase in occupancy cost overall, though Stockholm (Sweden) registered some of the fastest growth in Europe. Palma de Mallorca (Spain), Belfast (U.K.) and Amsterdam (Netherlands) also showed double-digit growth, with Lyon (France) and Berlin (Germany) not far behind.

In London’s West End, the fall in occupancy costs is largely due to a fall in rents triggered by more subdued demand, particularly amongst financial occupiers who have become less willing to pay the high rents prevailing in London’s premier market.

Occupier efforts to reduce occupancy costs due to the ongoing strength of the Swiss franc relative to the euro have resulted in falls in Swiss markets, including Geneva and Zurich.

London (City) was pushed out of the top-10 most expensive markets to 11th place, despite prime office costs rising by 2.9%.

Asia Pacific

In Asia Pacific, Shanghai (Puxi) in China had the highest growth in occupancy cost, followed by Guangzhou, Bangalore and Shanghai (Pudong).

In Singapore, occupancy costs continued to fall, thanks to increased supply of office stock and weak levels of inflation.

Asia Pacific was home to seven of the top 10 most expensive markets—Hong Kong (Central), Hong Kong (West Kowloon), Beijing (CBD), Beijing (Finance Street), Tokyo (Marunouchi/Otemachi), New Delhi (Connaught Place – CBD), and Shanghai (Pudong).

Hong Kong (Central) is the only market in the world with a prime occupancy cost exceeding US$300 per sq. ft.

The most expensive market in the global ranking from the Pacific Region was Sydney (US$97 per sq. ft.), in 19th place.

Americas

In the Americas, suburban Denver, suburban Houston and New York Midtown South saw the largest occupancy-cost increases in the U.S., but Buenos Aires showed the biggest increase in the Americas overall.

New York Midtown, number three on the global list, remained the most expensive market in the Americas, with a prime office occupancy cost of US$203 per sq. ft. New York Midtown South took the eighth spot on the list with a prime office occupancy cost of US$156 per sq. ft.

Sao Paulo was the most expensive market in Latin America, posting an office occupancy cost of US$69 per sq. ft. and ranking as the 35th most expensive market globally.

Top 10
Most Expensive Markets

(In US$ per sq. ft. per annum)

Rank Market Occupancy Cost
1 Hong Kong (Central), Hong Kong 302.51
2 London (West End), United Kingdom 213.85
3 New York (Midtown Manhattan), U.S. 202.79
4 Hong Kong (West Kowloon), Hong Kong 190.02
5 Beijing (CBD), China 183.10
6 Beijing (Finance Street), China 170.29
7 Tokyo (Marunouchi/Otemachi), Japan 161.76
8 New York (Midtown-South Manhattan), U.S. 156.19
9 New Delhi (Connaught Place – CBD), India 153.89
10 Shanghai (Pudong), China 133.82

Largest Annual Changes
Occupancy Costs

(In local currency and measure)

Top 5 Increases

Rank Market % Change
1 Durban, South Africa 21.2
2 Buenos Aires, Argentina 20.0
3 Stockholm, Sweden 18.8
4 Denver (Suburban), U.S. 17.2
5 Palma de Mallorca, Spain 16.5

Top 5 Decreases

Rank Market % Change
1 Jakarta, Indonesia -19.6
2 Moscow, Russian Federation -18.0
3 Geneva, Switzerland -9.8
4 Hanoi, Vietnam -7.4
5 Calgary (Downtown), Canada -6.7

Note: The full Top 50 Most Expensive Markets chart is located at the end of this press release.

Notes

  1. The Global Prime Office Occupancy Costs report is a survey of office occupancy costs for prime office space in 121 cities worldwide.
  2. The latest survey provides data on office rents and occupancy costs as of March 31, 2017.
  3. The Largest Annual Changes rankings are based upon occupancy costs in local currency and measure. The Most Expensive ranking is based upon occupancy costs in US$ per sq. ft. per annum.
  4. The figures given in this release refer to occupancy cost. This represents rent, plus local taxes and service charges. The occupation cost figures have also been adjusted to reflect different measurement practices from market to market.
  5. Due to methodology changes, comparisons with figures in previously released reports are not valid.
  6. To obtain a full copy of the report or to arrange to speak with a CBRE expert, please contact Robert McGrath (robert.mcgrath@cbre.com).

Top 50 Most Expensive Office Markets

(In US$ per sq. ft. per annum)

Rank (Q1 2017) Market Occupancy Cost
1 Hong Kong (Central), Hong Kong 302.51
2 London (West End), United Kingdom 213.85
3 New York (Midtown Manhattan), U.S. 202.79
4 Hong Kong (West Kowloon), Hong Kong 190.02
5 Beijing (CBD), China 183.10
6 Beijing (Finance Street), China 170.29
7 Tokyo (Marunouchi/Otemachi), Japan 161.76
8 New York (Midtown-South Manhattan), U.S. 156.19
9 New Delhi (Connaught Place – CBD), India 153.89
10 Shanghai (Pudong), China 133.82
11 London (City), United Kingdom 130.17
12 Moscow, Russian Federation 118.70
13 Shanghai (Puxi), China 113.02
14 San Francisco (Downtown), U.S. 112.71
15 Dubai, United Arab Emirates 106.17
16 Boston (Downtown), U.S. 102.50
17 Seoul (CBD), South Korea 100.62
18 Paris, France 100.55
19 Sydney, Australia 97.17
20 Mumbai (Bandra Kurla Complex), India 96.91
21 San Francisco (Peninsula), U.S. 96.84
22 New York (Downtown Manhattan), U.S. 91.18
23 Washington, D.C. (Downtown), U.S. 90.15
24 Los Angeles (Suburban), U.S. 89.57
25 Seoul (Yeouido), South Korea 89.27
26 Shenzhen, China 86.65
27 Singapore, Singapore 85.02
28 Geneva, Switzerland 80.76
29 Dublin, Ireland 80.59
30 Stockholm, Sweden 80.34
31 Istanbul, Turkey 75.06
32 Zurich, Switzerland 73.33
33 Mumbai (Nariman Point – CBD), India 73.10
34 Guangzhou, China 69.57
35 São Paulo, Brazil 69.47
36 Taipei, Taiwan 67.92
37 Manchester, United Kingdom 64.72
38 Tel Aviv, Israel 63.70
39 Ho Chi Minh City, Vietnam 63.61
40 Houston (Downtown), U.S. 63.10
41 Birmingham, United Kingdom 62.53
42 Milan, Italy 61.70
43 Seattle (Downtown), U.S. 61.12
44 Edinburgh, United Kingdom 59.40
45 Helsinki, Finland 59.07
46 Seattle (Suburban), U.S. 58.35
47 Perth, Australia 57.60
48 Chicago (Downtown), U.S. 57.51
49 Brisbane, Australia 57.03
50 Jakarta, Indonesia 57.02

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

MEDIA CONTACT:

Robert McGrath
212.984.8267
robert.mcgrath@cbre.com

SOURCE: CBRE Group, Inc.

CBRE’s new Global Prime Office Rents survey: Hong Kong is the world’s highest-priced office market

Los Angeles, 2017-Mar-22 — /EPR Retail News/ — Hong Kong is the world’s highest-priced office market, according to CBRE Group, Inc.’s new Global Prime Office Rents survey. European markets showed the most consistent growth in prime office rent, mostly due to a lack of supply. Belfast (up 25 percent year-over-year) led the way among the 121 cities surveyed.

Hong Kong had two of the top three most expensive office markets. Hong Kong’s (Central) held the top spot with prime office rent of US$264 per sq. ft. per year and Hong Kong (West Kowloon) (US$163 per sq. ft.) was third.  Rounding out the top five were two Chinese markets — Beijing (Finance Street) (US$179 per sq. ft.) at #2 and Beijing (Central Business District (CBD)) (US$156 per sq. ft.) at #4 — and London’s West End (US$146 per sq. ft.).  The most expensive market in North America was New York (Midtown Manhattan), number six on the global list, with a prime office rent of US$144 per sq. ft.

Global prime office rents—which reflect rent, excluding local taxes and service charges for the highest-quality, “prime” office properties—rose 2.3 percent compared with a year-earlier for the 12 months ended [December 31, 2016], with EMEA up 3.7 percent and Asia Pacific and the Americas each up 1.8 percent.

Four of the top five fastest-growing (prime office rents) markets were in Europe, with Stockholm, Berlin and Dublin joining Belfast on the list. Chicago (Downtown), with rent growth of 19.9 percent was the top market in the Americas and was number two on the global list.  Hong Kong (West Kowloon) with a rent rise of 9.3 percent was the top growth market in Asia.

“We expect the global economy to pick up momentum with growth boosted by fiscal expansion in the U.S.,” said Richard Barkham, global chief economist, CBRE. “Growth was underpinned by positive monetary conditions in Europe and increased government spending in China, both of which are expected to continue.”

CBRE tracks office rents for prime office space in 121 markets around the globe. Of the top 50 “most expensive” markets, 20 were in Asia Pacific, 19 were in EMEA and 11 were in the Americas.

Europe Middle East & Africa (EMEA)
Europe has seen the strongest rent increase due to low supply and high demand. Stockholm, Berlin and Dublin had significant rent growth. However, rents in London’s West End fell by 6.3 percent as activity waned in the wake of the Brexit referendum. In Istanbul, rents fell by 11.1 percent, largely due to political instability in the area.

30 of the 56 EMEA markets recorded a year-over-year increases in prime office rents.

Asia Pacific
Asia Pacific led the list of most expensive prime office rents with seven of the top 10 most expensive markets—Hong Kong (Central), Beijing (Finance Street), Hong Kong (West Kowloon), Beijing (CBD), Tokyo (Marunouchi/Otemachi), Shanghai (Pudong) and New Delhi (Connaught Place – CBD).

Prime rent growth in Asia Pacific averaged 1.8 percent and was strongest in gateway cities. Hong Kong (West Kowloon) led the way at 9.3 percent due to strong demand from Chinese companies for premium locations and very tight supply conditions. Technology start-ups have played a key role in the fastest-growing markets in Asia Pacific, such as Bangalore, Sydney, Bangkok and Auckland.

The most expensive market in the global ranking from the Pacific Region was Sydney (US$78 per sq. ft.), in 20th place.

Americas
In the Americas, three markets—Chicago (Downtown), Seattle (Suburban) and Seattle (Downtown) showed double-digit growth in prime office rents year-over-year, due to a lack of new construction in Chicago and technology growth in Seattle.

Several markets dependent on the oil and gas industry experienced lowered prime office rents, including Calgary (Downtown and Suburban), Houston (Downtown) and Denver (Downtown).

Overall, office rents increased in 19 out of 34 U.S. markets covered in this survey.

Mexico City was the most expensive market in Latin America, with prime office rent of US$50 per sq. ft. and ranking as the 40th most expensive market globally. Prime office rents in São Paulo declined but Buenos Aires saw a modest increase.

Note: The full Top 50 Most Expensive Markets chart is located at the end of this press release.

Notes
1.    The Global Prime Office Rents report is a survey of office rents for prime office space in 121 cities worldwide.
2.    The survey provides data on office rents as of December 31, 2016.
3.    The Largest Annual Changes rankings are based upon occupancy costs in local currency and measure. The Most Expensive ranking is based upon occupancy costs in US$ per sq. ft. per annum.
4.    The figures given in this release refer to office rents. This represents rent on a net-basis (exclusive of service charges and taxes). The office rent figures have also been adjusted to reflect different measurement practices from market to market.
5.    Due to methodology changes, comparisons with figures in previously released reports are not valid.
6.    To obtain a full copy of the report or to arrange to speak with a CBRE expert, please contact Robert McGrath (robert.mcgrath@cbre.com).

global prime office rents

CBRE’s Global Prime Office Rents survey is performed semi-annually.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

MEDIA CONTACT:
Robert McGrath
Senior Director, Global Media Relations
+1 212 9848267

Source:  CBRE Group, Inc.

CBRE releases ‘Global Gateway Cities’ report on prime office and prime retail locations of 20 global gateway cities

Los Angeles, 2016-Nov-04 — /EPR Retail News/ — CBRE Group Inc. today (November 2, 2016) releases ‘Global Gateway Cities’–a comprehensive guide for investors seeking to acquire real estate assets in the world’s great cities.

The report focuses on the prime office and prime retail locations of 20 global gateway cities, providing perspective on key variables such as economic trends; occupier trends; supply trends; rent trends; yield trends; and investment activity, so that investors can quickly and easily understand pricing and market conditions.

Beijing, Boston, Chicago, Frankfurt, Hong Kong, London, Los Angeles, Madrid, Milan, Munich, New York, Paris, San Francisco, Shanghai, Singapore, Sydney, Tokyo, Toronto, Vancouver and Washington, D.C. are featured in the report as key targets for international investors. These cities were selected based on size, transport infrastructure, corporate presence, real estate investment flows and several other indicators of importance.

“Global gateway cities offer many benefits to real estate investors. Their attractiveness to people and businesses means that space demand in commercial real estate markets increases steadily over the long-term, underpinning rental growth. These cities are highly liquid markets, where real estate investments can be readily bought and sold. Real estate in the global gateways provides capital protection and, in this era of low bond rates, a good income return. Lot sizes vary from small to huge, so large sums of capital can be deployed if necessary,” said Chris Ludeman, Global President, CBRE Capital Markets.

“We live in an age of cities. In emerging markets, they are hubs of explosive growth in production and distribution facilities. In the developed world, where the service sector drives economic activity, cities have reinvented themselves as vibrant live-work-play destinations. Millennials continue to flock to cities to work in the highly dynamic sectors of tech, fashion and high finance,” said Dr. Richard Barkham, Global Chief Economist, CBRE.

“The great gateway cities are world-class transport hubs; they are networked into the global economy via their ports and airports, and to their hinterlands via the road and rail network. Their Central Business Districts, with extensive stock of modern offices, host national and regional corporate headquarters and the legal, accountancy and consulting services these require. These cities have highly diversified economies with many sectors and subsectors, which, alongside their entrepreneurialism, makes them highly resilient to the ebb and flow of economic events,” Mr. Barkham added.

To download a copy click here.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2015 revenue).  The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide.  CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

MEDIA CONTACT:
Robert McGrath
Senior Director, Global Media Relations
+1 212 9848267

Source:  CBRE Group, Inc.

CBRE: Hong Kong becomes the world’s highest-priced office market

LOS ANGELES , CA, 2016-Jun-15 — /EPR Retail News/ — Hong Kong has become the world’s highest-priced office market and Asia continued to top the list of the world’s most expensive office locations, accounting for four of the top five markets, according to CBRE Research’s  latest semi-annual Global Prime Office Occupancy Costs survey.

Hong Kong’s (Central) overall prime occupancy costs of US$290 per sq. ft. per year topped the “most expensive” list, displacing London’s West End (US$262 per sq. ft.). Beijing (Finance Street) (US$188 per sq. ft.), Beijing (Central Business District (CBD)) (US$182 per sq. ft.) and Hong Kong (West Kowloon) (US$179 per sq. ft.) rounded out the top five.

The study also found that the real estate recovery in Ireland continued to gain momentum, with Dublin, which experienced a 50 percent drop in rents during the downturn, showing the second-largest year-over-year prime occupancy cost increase among the 126 cities surveyed (up 16.6 percent year-over-year)—second only to Hong Kong West Kowloon (up 19.5 percent year-over-year). In North America, real estate fundamentals saw steady improvement with both Atlanta (Downtown) and Seattle (Downtown) among the 10 markets with the fastest growing prime occupancy costs.

Global prime office occupancy costs—which reflect rent, plus local taxes and service charges for the highest-quality, “prime” office properties—rose 2.4 percent year-over-year, with the Americas up 2.3 percent, EMEA up 2.1 percent and Asia Pacific up 2.7 percent.

“We expect the global economy to keep growing, and the global service sector, the primary occupier of prime office properties, will continue to expand through periods of volatility, “ said Richard Barkham, global chief economist, CBRE. “Since inflation is low, the growth in prime office occupancy costs is significant for both users and investors.”

CBRE tracks occupancy costs for prime office space in 126 markets around the globe. Of the top 50 “most expensive” markets, 20 were in Asia Pacific, 20 were in EMEA and 10 were in the Americas.

Europe Middle East & Africa (EMEA)
Europe is benefitting from a cyclical pick-up in consumer spending and business investment, as well as a very competitive currency and intense monetary stimulus, which helped to make Dublin, Stockholm and Barcelona the fastest-growing markets in the region. Most Central and Eastern European markets were down year-over-year, including Moscow, which is still in the midst of a recession. Costs accelerated quickly in South Africa, with Johannesburg, Cape Town and Durban all seeing increases of at least 6.9 percent from year-ago levels.

Only 11 out of 56 EMEA markets recorded a year-over-year decline in prime office occupancy costs.

In addition to London West End, the other market from the region in the global top 10 was London City (US$145 per sq. ft.).

Asia Pacific
Asia Pacific was home to seven of the top 10 most expensive markets—Hong Kong (Central), Beijing (Finance Street), Beijing (CBD), Hong Kong (West Kowloon), Tokyo (Marunouchi/Otemachi), New Delhi (Connaught Place – CBD), and Shanghai (Pudong).

The service sector will show particularly strong growth in Asia as pensions and insurance products gain market share. So occupancy cost growth will continue to trend upwards at a moderate pace.

Hong Kong (Central) is the only market in the world—other than London’s West End—with a prime occupancy cost exceeding US$200 per sq. ft. Hong Kong Central’s double-digit growth in occupancy costs was fuelled by two factors: an ultra-low vacancy rate due to lack of new development and continued demand for high-quality space in prime locations by mainland Chinese companies.

The most expensive market in the global ranking from the Pacific Region was Sydney (US$93 per sq. ft.), in 22nd place.

A few key Southeast Asian markets registered decreases, including Singapore and Jakarta.

Americas
In the Americas, four markets—Monterrey, Atlanta (Downtown), Seattle (Downtown) and Atlanta (Suburban)—recorded double-digit percentage gains year-over-year.

New York Midtown, number nine on the global list, remained the most expensive market in the Americas, with a prime office occupancy cost of US$137 per sq. ft.

Several energy-centric markets experienced material drops in occupancy costs, including Calgary (Downtown and Suburban), Houston (Suburban) and Denver (Suburban).

In the U.S., economic growth is expected to pick up in the next several quarters following a turbulent opening quarter. Overall, occupier activity sustained last year’s momentum, leading to an increase in occupancy costs in 17 out of 22 U.S. markets covered in this survey.

Mexico City remained the most expensive market in Latin America, posting an office occupancy cost of US$65 per sq. ft. and ranking as the 39th most expensive market globally. Both Brazilian markets, Rio de Janeiro and São Paulo, saw declines.

Microsoft Word - Press release - POOC June 2016_FINAL.docx
Note: The full Top 50 Most Expensive Markets chart is located at the end of this press release.

Notes

  1. The Global Prime Office Occupancy Costs report is a survey of office occupancy costs for prime office space in 126 cities worldwide.
  2. The latest survey provides data on office rents and occupancy costs as of March 31, 2016.
  3. The Largest Annual Changes rankings are based upon occupancy costs in local currency and measure. The Most Expensive ranking is based upon occupancy costs in US$ per sq. ft. per annum.
  4. The figures given in this release refer to occupancy cost. This represents rent, plus local taxes and service charges. The occupation cost figures have also been adjusted to reflect different measurement practices from market to market.
  5. Due to methodology changes, comparisons with figures in previously released reports are not valid.
  6. To obtain a full copy of the report or to arrange to speak with a CBRE expert, please contact Robert McGrath (robert.mcgrath@cbre.com).

Microsoft Word - Press release - POOC June 2016_FINAL.docx

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

MEDIA CONTACT
Robert McGrath
Senior Director, Global Media Relations
+1 212 9848267
email

###

 

CBRE Research: lower oil prices will have effects across Houston commercial real estate market, but fears of broad-based decline are overblown

CBRE report shows impact will vary by property type, with the retail sector most insulated and the office market most exposed

​Los Angeles, 2015-3-12 — /EPR Retail News/ — Lower oil prices will have effects across the Houston commercial real estate market, but fears of broad-based decline are overblown, according to a new report from CBRE Research. The report finds that the degree of impact will vary based on the magnitude of change in employment, and by property type, with expected impact to the retail sector being negligible and the office sector, modestly negative.

“The outlook for Houston commercial real estate is less positive than a year ago, and certain submarkets and property sectors can expect to see at least temporary shortfalls in demand,” said Spencer Levy, Americas Head of Research, CBRE. “However, we expect oil prices to slowly drift up over the next two or three years. That, plus strong growth in the U.S. economy will limit the impact of the recent drop in prices on the market.”

Much has been written in the popular, economic and real estate press about the challenges the Houston economy may face due to low oil prices. However, in commercial real estate the story is more nuanced, with a number of considerations, including:

  • The U.S. economy will benefit on net from lower oil prices, with the positive impact to consumer spending potentially boosting real GDP growth by up to 0.7 percent in 2015, according to Moody’s Analytics.
  • Houston’s economy is entering this period from a position of strength, having gained four new jobs since 2009 for each one lost during the recession while experiencing income growth about the national average.
  • While energy is a key industry in the Houston economy, the sector has also diversified across the energy industry’s three segments – upstream, midstream and downstream – and each is impacted by lower oil prices in different ways. Most notably, the negative impacts to exploration and production (upstream) will be partially offset by positive impacts on petrochemical manufacturing (downstream).
  • Retail is best positioned among the property types because the spending of Houstonians will benefit from lower gasoline prices, the occupancy rate is historically high and construction of new shops has been uniquely constrained in this cycle.
  • The office market is most exposed due to the Houston’s concentration of upstream energy headquarters and major operations as well as the amount of new supply coming on line through 2017.
  • Impacts to industrial and multifamily will likely be limited to slower rent growth. Both sectors enter this period with strong occupancy and face offsets to weakness in the upstream segment from downstream expansion and, for multifamily, support for continued demand from a tight single-family market.

“Ultimately, the fall in oil prices results in winners as well as losers. The winners are broadly spread, the losers are usually in specific locations” added Mr. Levy. “Investors are acknowledging the changing global industry dynamics, including the U.S. push for energy independence, the decline in OPEC’s power and growing political support for the international trade of domestic liquefied natural gas (LNG) and crude oil – all of which could potentially have positive implications for Houston and the U.S. energy sector.”

CBRE Research’s global perspective is that most of the oil-producing economies face a tough 18 months or so. “Russia, for instance, is expected to see its GDP decline in 2015 by 5 to 8 percent. However, led by the U.S., overall growth in the world economy is expected to pick up in 2015 and 2016. This will provide some support for oil prices, which we expect to drift up slowly from this point onwards as some production capacity comes out of the market,” said Richard Barkham, Global Chief Economist, CBRE.

“It was always clear that the beneficial effect, on consumer spending for instance, would only show through in the medium term. The pain would be near term and localized in energy-centric markets, such as Houston and Calgary. Houston can at least look forward to some offset for falling energy-related investment from revived domestic demand growth across the whole of the U.S. The same cannot be said for Russia, Venezuela and Nigeria,” added Mr. Barkham.

Note to editors/journalists: To speak with a CBRE expert or obtain a copy of the report, please email robert.mcgrath@cbre.com or corey.mirman@cbre.com.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue).  The Company has more than 52,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 370 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

For Further Information

Robert Mcgrath
Director, Sr
T +1 212 9848267
email

Corey Mirman
Specialist, Sr Communication
T +1 212 9846542
email

CBRE Research’s survey: London’s West End remained the world’s highest-priced office market but Asia continued to dominate the world’s most expensive office locations

Three of Five Priciest Markets are in Asia; Five of 10 Fastest Growing Occupancy Cost Markets are in U.S.

Los Angeles, 2014-12-19 — /EPR Retail News/ — London’s West End remained the world’s highest-priced office market but Asia continued to dominate the world’s most expensive office locations, accounting for three of the top five markets, according to CBRE Research’s semi-annual Global Prime Office Occupancy Costs survey. The study also found that prime rents are rising fastest in the Americas, where real estate fundamentals continue to improve. Overall, the U.S. accounted for five of the 10 markets with the fastest growing prime occupancy costs. These markets were Seattle (Suburban), San Francisco (Peninsula), Boston (Suburban), San Francisco (Downtown) and Seattle (Downtown).

London West End’s overall prime occupancy costs of US$274 per sq. ft. per year topped the “most expensive” list. Hong Kong (Central) followed with total prime occupancy costs of US$251 per sq. ft., Beijing (Finance Street) (US$198 per sq. ft.), Beijing (Central Business District (CBD)) (US$189 per sq. ft.) and Moscow (US$165 per sq. ft.) rounded out the top five.

The change in prime office occupancy costs mirrored the gradual, multi-speed recovery of the global economy. Global prime office occupancy costs rose 2.5 percent year-over-year, led by the Americas (up 4.1 percent) and Asia Pacific (up 2.8 percent). Meanwhile, EMEA was essentially flat, edging up 0.3 percent year-over-year.

“We expect the gradual recovery of the global economy to continue, leading to better hiring rates and further reduction in the availability of space across most markets over the near term,” said Richard Barkham, Global Chief Economist, CBRE. “In this environment, we expect occupancy costs to continue rising from current levels, further limiting options for occupiers. Technology, quality and flexibility are expected to increasingly come into consideration in space use and location decisions, as occupiers will seek to contain costs and improve productivity.”

CBRE tracks occupancy costs for prime office space in 126 markets around the globe. Of the top 50 “most expensive” markets, 20 were in EMEA, 20 were in Asia Pacific and 10 were in the Americas.

Europe Middle East & Africa (EMEA)
The Eurozone’s tepid economic recovery has held back occupier activity, resulting in static prime occupancy costs in most core European markets. The region’s 0.3 percent year-over-year increase in prime occupancy costs was primarily driven by buoyant conditions in U.K. cities, most Nordic markets, and the strong recovery of the Dublin office market. The main decreases have been in central European markets, such as Warsaw (down 1.6 percent), where the economies are relatively healthy but new supply has driven down rents. In only a few markets, notably Dublin (up 34.9 percent) and London, a robust recovery in occupier demand coincided with a lack of new supply.

In addition to London West End, other markets from the region on the global top 10 list were Moscow (US$165 per sq. ft.) and London City (US$153 per sq. ft.).

Asia Pacific
Asia Pacific had 20 markets ranked in the top 50 most expensive, including seven of the top 10—Hong Kong (Central), Beijing (Finance Street), Beijing (CBD), New Delhi (Connaught Place – CBD), Hong Kong (West Kowloon), Tokyo (Marunouchi Otemachi) and Shanghai (Pudong). Occupier activity in the region was largely driven by domestic corporations and companies in the technology, media and telecommunications sectors. Half the markets saw costs increase above 1 percent.

Hong Kong (Central) remained the only market in the world—other than London’s West End—with a prime occupancy cost exceeding $200 per sq. ft.

The most expensive market in the global ranking from the Pacific Region was Sydney (US$99 per sq. ft.), in 19th place.

Americas
In the U.S., where the economic recovery has firmly taken hold, strong leasing activity led to the highest level of quarterly net absorption since 2007, driving above-inflation increases in prime occupancy costs across all but one major U.S. market. Additionally, increasingly broad-based rising hiring rates have boosted demand for office space.

Eight North American markets recorded double-digit increases in prime occupancy costs in Q3 2014, and the top six growth markets in the Americas were all U.S. cities.

New York Midtown, the 11th most expensive market in the world, remained the most expensive Americas market, with a prime office occupancy cost of US$121 per sq. ft.

Rio de Janeiro remained the most expensive market in Latin America, posting an office occupancy cost of US$101 per sq. ft. and ranking as the 18th most expensive market globally.

Top 10 Most Expensive Markets
(In US$ per sq. ft. per annum)

Microsoft Word - Press release - POOC December 2014 FINAL.doc

Largest Annual Changes Occupancy Costs
(In local currency and measure)

Microsoft Word - Press release - POOC December 2014 FINAL.doc

 

Note: The full Top 50 Most Expensive Markets chart is located at the end of this press release.

Notes

  1. The Global Prime Office Occupancy Costs report is a survey of office occupancy costs for prime office space in 126 cities worldwide.
  2. The latest survey provides data on office rents and occupancy costs as of September 30, 2014.
  3. The Largest Annual Changes rankings are based upon occupancy costs in local currency and measure. The Most Expensive ranking is based upon occupancy costs in US$ per sq. ft. per annum.
  4. The figures given in this release refer to occupancy cost. This represents rent, plus local taxes and service charges. The occupation cost figures have also been adjusted to reflect different measurement practices from market to market.
  5. Due to methodology changes, comparisons with figures in previously released reports are not valid.
  6. To obtain a full copy of the report or to arrange to speak with a CBRE expert, please contact Robert McGrath (robert.mcgrath@cbre.com) or Corey Mirman (corey.mirman@cbre.com).

Top 50 Most Expensive Office Markets
(In US$ per sq. ft. per annum)

Microsoft Word - Press release - POOC December 2014 FINAL.doc

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue).  The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

###

For Further Information:

Robert Mcgrath
Director, Sr
T +1 212 9848267
email

Corey Mirman
Specialist, Sr Communication
T +1 212 9846542
email

CBRE research: Hong Kong, New York, Paris, London and Tokyo retained their positions as the world’s most expensive high-street retail destinations in Q3 2014

Hong Kong Remains World’s Most Expensive Retail Market by Substantial Margin

​Los Angeles, 2014-12-8 — /EPR Retail News/ — Hong Kong, New York, Paris, London and Tokyo retained their positions as the world’s most expensive high-street retail destinations in Q3 2014, according to new research from global property advisor CBRE Group, Inc.

CBRE’s quarterly ranking of the world’s prime global retail markets saw little change in Q3 2014, with global and hot-growth markets continuing to lead the list. Retailers across all markets continue to target high-end shopping areas and international tourists.

“Even with the somewhat gloomy economic headlines, consumer demand is reasonably firm in most markets,” said Richard Barkham, Global Chief Economist, CBRE. “We can expect to see a continuation of the post-crisis pattern of periods of optimism followed by periods of pessimism. The Americas will see stronger growth than the Eurozone, as the latter has been constrained by restructuring in the banking sector as well as overly tight fiscal and monetary policy. Asia Pacific will record slightly lower growth in 2014 over 2013, but is still expected to outpace the other two regions by a considerable margin.”

Hong Kong (US$4,327 per sq. ft. per annum) maintained a wide lead over the number-two market, New York (US$3,570 per sq. ft. per annum)—where prime rent along Fifth Avenue is at record levels. Rents in Hong Kong remained stable compared to Q2 2014.

The “Occupy Central” protest, which began late in the third quarter, has not yet materially impacted retail rents in Hong Kong,” said Henry Chin, Head of Research, Asia Pacific, CBRE. “We did see lower shopper footfall in affected areas in October; however, the Christmas shopping season will provide some support to retail sales in the final quarter.”

A large rental spread also exists between New York and the two leading European markets: Paris (US$1,331per sq. ft. per annum) and London (US$1,328 per sq. ft. per annum). The gap between the top four markets and the rest of the top 10 widens significantly.

Q3GlobalRentsTable.jpg

While the top four cities continue to hold their leading positions, there was some movement lower in the top 10 rankings. Rents rose in Tokyo (US$1,076 per sq. ft. per annum), and fell in Zurich ($895 per sq. ft. per annum) and Sydney (US$730 per sq. ft. per annum), resulting in the cities changing positions this quarter.

In Q3 2014, Tokyo continued to lead rental growth in Asia Pacific, with the continued lack of space in major high-street retail locations pushing up retail rents 7.7 percent quarter-over-quarter. Strong rental growth was also recorded in a number of emerging markets in the region, particularly in India and Vietnam, reflecting the recent resumption of structural economic reforms following the general lack of progress over the past few years. Highlights included a strong 5.9 percent quarter-over-quarter rental growth in Ho Chi Minh City and a 4.0% quarter-over-quarter rental growth in Mumbai.

Retailer demand for prime locations in major cities across EMEA remained firm, but rental growth has tailed off, leaving most markets flat in Q3 2014. Hamburg (up 6.5 percent quarter-over-quarter) and Munich (up 5.6 percent quarter-over-quarter) were among the few markets to record growth, reflecting the fact that, despite the recent economic headlines, domestic consumption in Germany remains firm.

In the U.S., four of the 12 prime retail corridors tracked by CBRE Research saw quarter-over-quarter increases in prime rents during Q3 2014. Prime asking rents along Rodeo Drive in Los Angeles (US$640 per sq. ft. per annum) continue to be the highest in the U.S. outside of Manhattan, and are expected to record further increases over the remainder of 2014, as there continues to be a lack of available space. Miami (up 3.2 percent quarter-over-quarter), Washington, D.C. (up 2.2 percent quarter-over-quarter), and New York (up 2.0 percent quarter-over-quarter) also reported increasing in prime asking rents in Q3 2014. In Canada, high-street rents were unchanged in Montreal, Vancouver and Toronto, and have remained at their current level since Q4 2013.

Note to editors/journalists:  To speak with a CBRE retail expert please email robert.mcgrath@cbre.com orcorey.mirman@cbre.com

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue).  The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

For Further Information:

Robert Mcgrath
Director, Sr
T +1 212 9848267
email

Corey Mirman
Specialist, Sr Communication
T +1 212 9846542
email

CBRE Group, Inc. announces the appointment of Jeffrey R. Havsy as Americas Chief Economist effective December 1

Los Angeles, 2014-11-10— /EPR Retail News/ — CBRE Group, Inc. today announced that Jeffrey R. Havsy, a leading analyst of commercial real estate, will join the company as Americas Chief Economist, effective December 1.

The Americas Chief Economist is a new position in which Mr. Havsy will work with CBRE’s research team to develop insight, analysis and a viewpoint on economic, financial and market trends impacting commercial real estate. Mr. Havsy joins CBRE from the National Council of Real Estate Investment Fiduciaries (NCREIF), where he was Director of Research.

“Jeff is a terrific addition to our Americas Research team, he is a leading real estate analyst and a top forecaster of future activity,” said Spencer Levy, Americas Head of Research. “His insight will be invaluable in formulating the thoughtful perspective on the macro environment essential to providing our clients with the best advice. Jeff’s addition to the CBRE team is another important step in further aligning our research and economic forecasting efforts to more efficiently meet the needs of our clients.”

Mr. Havsy will also lead a team of economists at CBRE Econometric Advisors (CBRE EA), the company’s real estate forecasting unit. He will work closely with Richard Barkham, CBRE’s Global Chief Economist, Bill Wheaton, the co-founder of CBRE EA, and Mr. Levy to further align CBRE’s forecasting and market research activities.

Mr. Havsy brings to CBRE a nearly two decade track record of producing results using economic analysis, commercial real estate research, strategic analysis, and risk management techniques for a wide range of financial assets. Prior to his role at NCREIF Mr. Havsy held senior real estate strategy positions at Property & Portfolio Research, Equity Office Properties and LaSalle Investment Management. He began his career as an economist at the Chicago Board of Trade.

Mr. Havsy received a B.A. in Economics from Lehigh University, an M.A. in Economics from the University of Virginia and did significant course work toward a Ph.D from the University of Virginia. He is a Homer Hoyt Fellow.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue).  The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

For Further Information:

Robert Mcgrath
Director, Sr
T +1 212 9848267
email