WORLD PROPERTY CHANNEL ®

• Class A space in London's West End sector hits $184.85 per SF.
• In the U.S., Washington, DC's $51.74 per SF is the least expensive of 50 top markets.
• Tokyo (Inner Central) is Asia's most expensive rental market at $172 per SF
• Rents at 50 of the 179 monitored markets fell by 50% in 2009.
• In Abu Dhabi, rents tumble 36.8%.
• CBRE's Raymond Torto sees market moving to stabilization stage.
• Toronto is Canada's most expensive office market at $60.78 per SF
• Aberdeen, Scotland and Rio de Janeiro, Brazil office markets both grew by more than 10%

(LOS ANGELES, CA) -- If you are only looking for a 10 x 10 cubicle-size office in London's trendy West End district, it's going to cost you rent of $18,485 per year. That's $184.85 per square foot.

In Washington, DC, the same size space will cost you $5,174 per year. That' comes to only $51.74 per square foot.

But who works in a 100-square-foot office?

Few, if any professionals or companies, according to the newest CB Richard Ellis Group, Inc. (CBRE) Global Research and Consulting's semi-annual Global Office Rents survey.

The survey found London's West End is again the world's most expensive office market.

Tokyo's Inner Central has slipped to second place, followed by that city's Outer Central market. Hong Kong's Central Business District (CBD) and Moscow are fourth and fifth respectively in the CBRE report, which tracks office occupancy costs in 179 cities around the globe.

Office markets worldwide are experiencing declines in prime office occupancy costs. The year-over-year change in prime office occupancy costs of the 179 markets monitored revealed an average drop of 7.7% worldwide over the 12-month period ending Sept. 30, 2009 (in local currency and on an un-weighted average basis). 

The majority of markets - 131 markets in total - experienced a year-over-year decline including nearly 50 which saw rents tumble by double-digit percentage-points. 

Many of the world's bellwether  financial centers are at the top of the list of fastest changing markets, including Hong Kong Central CBD(-40.7%) and New York, Midtown(-29.7%) along with emerging markets such as Ho Chi Minh City(-45.4%) and Abu Dhabi(-38.6%). 

Kiev led the world with the largest year-over-year decrease in office occupancy costs, falling 64.6% from year-ago levels.

Raymond Torto

"While there are signs that commercial real estate values are stabilizing in some markets in Asia and parts of London, underlying property fundamentals are still weak," said Dr. Raymond Torto, CBRE's Global Chief Economist.

"However the office market may be on the cusp of moving from intensive care to the stabilization stage - the first step to getting back to good health."

Forty-one markets experienced positive growth.

Aberdeen, Scotland and Rio de Janeiro, Brazil both grew by more than 10% as not all markets have been as affected by the decline in global demand and demand for office space has proven resilient in some areas due to the local market dynamics.

The report explains office occupancy costs measured in U.S. dollars are affected by changes in the dollar's value versus the respective local currency. "Hence, office occupancy costs when converted into U.S. dollars are driven by both the local market dynamics of supply and demand, as well as currency changes," the report states.

Asia-Pacific

Tokyo (Inner Central) was Asia's most expensive market with an occupancy cost of $172 per sq. ft. while that city's Outer Circle market was second with occupancy costs of $139 per sq. ft. Hong Kong (CBD) follows with occupancy costs of $138 per sq. ft.

Mumbai and New Delhi were the other two Asia-Pacific markets in the world's top 10 most expensive cities roster.

For the Asia Pacific region, the office markets that experienced the largest decreases include Singapore (-53.4%), Ho Chi Minh City (-45.4%), as well Hong Kong which declined over 30% in the past year.  The Asia-Pacific region had 17 cities with double-digit declines in office occupancy costs.
 
Europe

London's West End was the world's most expensive office market at $184.5 per sq. ft. Moscow was second in Europe with occupancy costs at $132 per sq. ft. Dubai, Paris and the City of London all were in the top ten most expensive markets. 

Kiev led the world with the largest year-over-year decrease in office occupancy costs, falling 64.6% from year-ago levels.

Other markets in Europe that are experiencing the largest decreases include Moscow, Oslo, Warsaw and Dublin.  The EMEA region had 17 cities with double-digit declines in office occupancy costs.

Americas

Two cities in Brazil -- Rio de Janeiro and São Paolo -- have supplanted New York's Midtown as the most expensive office location in the Americas.

Rio de Janeiro's occupancy costs of $87 per sq. ft., was good for twelfth place on the global list, while  São Paulo came in at 16th globally with occupancy averaging $82 per sq. ft.  New York's Midtown's market has dropped to third in the Americas and 24th globally with occupancy costs of $69 per sq. ft.

Boston's CBD led the Americas, with a decline of 33.9% year-over-year, followed by New York's Downtown and Midtown markets.

Fifteen markets in North America posted double-digit declines. Meanwhile, Latin America held up stronger than the rest of the world, with only six cities registering a decline, including a 6.3% decrease in Buenos Aires, Argentina.

Mark Kolke

In Canada, Mark Kolke, a leasing agent at MaxComm Realty Advisors in Calgary, Alberta, tells the Toronto Globe and Mail, "Nobody is hearing anything about any big tenants coming to town."

He expects the dire leasing situation "to get worse before it gets better because there are a lot of musical chairs right now as tenants shop around for space."

Bill Argeropoulos, research director, Avison Young Commercial Real Estate, Toronto, says "some landlords are holding firm on price,  but then give away months and months of free rent in order to keep tenants happy."

Mark Rose

Mark Rose, president, Avison Young, also tells the Globe and Mail, "It all comes back to employment and some cities didn't see employment fall quite as much, especially provincial capitals."

Rose says he believes "we are seeing a cyclical problem, not a paradigm shift."  He adds, "When you've been in business as long as we have, you realize that there are cycles (in real estate markets)."




Methodology

• Global MarketView/Office Occupancy Costs is a survey of office occupation costs for prime office space in nearly 180 cities worldwide.
• The latest survey provides data on office rents and occupancy costs as of September 30, 2009.
• The Fastest Changing 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.
• 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. 

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