London´s West End remains the most expensive office location in the world. At US$ 149 /sq ft/annum, the occupation cost of top quality office in the West End is 26% higher than in the second most expensive location, Tokyo.
The particular strength of the Euro over the last year means that the list ranking of the most expensive locations in the world is dominated by European cities, seventeen of the top twenty. The top ten locations have been fairly stable over the last year. The only city to have been pushed out of the top ten over the last year is Moscow. The highest priced office market in North America is Midtown, Manhattan, in 21st place.
Europe
The first six months of 2004 have proved to be the turning point fin the EMEA office rental market cycle. Markets such as Central London and Paris have historically been the forerunners of this change. While London’s West End is seeing sharp rental growth, letting activity in Paris has not picked up sufficiently to cause rents to bottom out. Other markets with strong fundamentals such as Madrid and Milan have also experienced rental declines in recent quarters and are not expected to see an upturn before next year at the earliest. Levels of take-up across the EMEA region are rising and 2004 should exceed 2003’s total.
The office investment market continues to be strong across the region, even in markets where rental declines are prevalent. The low cost of borrowing has been supporting investment for some time and the poor performance of equities renders property more attractive. However, much of the region is suffering from a lack of product. This is forcing purchasers to look for non-traditional products outside of the CBD often shifting focus to secondary cities. A good example of this is France where, despite an under-performing occupational market, Paris remains a favorite location for investors. However, a lack of investment opportunities in Paris is forcing them to look to regional cities such as Lyon, Marseille and Lille.
Source: CBRE
