Prime office rents increased in all 10 major global business centers in 2006, with four posting increases of more than 20%, according to new research from CB Richard Ellis (CBRE). The increase in rents reflects tightening office market conditions around the globe. Vacancy rates declined virtually across the board and are currently in single digits in all 10 markets, CBRE reports.
In Europe, Madrid and London experienced the most significant rises. Madrid recorded a 25% increase in prime rent during 2006the second-highest of all 10 global marketswhile London posted a 22% increase. In the West End of Londonthe most expensive office market in the worldthe prime rent rose to 1,558 m² (£97.50 per square foot per annum), while top rents in Madrid reached 408 per square meter. At year end, vacancies in London and Madrid had fallen to 4.3% and 7.8%, respectively. Paris rents rose by over 9% during the year, with vacancy of just 5.2% by the end of 2006.
"Although the European economy is still lagging behind most of the rest of the world, the growth seen in 2006 was sufficient to generate rental increases in many European markets", adds Nick Axford, Head of EMEA Research and Consulting at CBRE. "In part this is due to the low levels of vacancy in the prime locations of many markets, but we are also starting to see the results of recent economic growth feeding through into more widespread increases in office demand. This is particularly the case in the UK and Spain, where relatively strong economic performance is driving rental growth in London and Madrid." Axford concludes.
Source: CB Richard Ellis