London remains most expensive city in the world for occupational costs

London Heathrow is the most expensive location for industrial property in the world, according to the latest King Sturge Global Industrial & Office Rents Survey. The report lists London´s Heathrow Airport as top, where the total occupation cost is euro 231.43 m² (£15,05 sq ft) per annum, followed by Dublin and Tokyo. The cheapest location for industrial space is in Shanghai, China where the occupational cost is euro 31.22 m² (£2.68 sq ft) per annum.

Glasgow was put in sixth place in the poll and is positioned ahead of all the major UK cities with the exception of London, with an industrial occupational cost of euro 148.39 m² (£9.65 sq ft) per annum for small industrial property and euro 129.17 m² (£8.40 sq ft) per annum for large industrial property.

Edinburgh was ranked seventh, just ahead of the other UK cities of Birmingham and Cardiff. The small industrial property cost for Edinburgh is euro 142.24 m² (£9.25 sq ft) per annum and euro 119.18 m² (£7.75 sq ft) per annum for large industrial property.

Commenting on the Scottish industrial market, Douglas Patrick, Partner at King Sturge says: 'The Scottish market is proving remarkably buoyant and the rankings for Glasgow and Edinburgh can be attributed to the sustained demand for top industrial space around the cities.'

Occupational costs, including prime rents and other charges, quoted in local currency for industrial space, rose on average by 5% across the world during the second half of 2003.

On a regional scale, North America experienced growth in occupation cost 7%, in Europe they rose by an average of 2%, whilst costs in Asia-Pacific remained unchanged.

London´s West End tops the list as a prime office space location at euro 1,353.22 m² (£88 sq ft) per annum, followed by City of London and Tokyo. Limburg in Belgium at and euro 105.00 m² (£6.87 sq ft) per annum is the cheapest city for office space.

Edinburgh and Glasgow were ranked 10th and 11th respectively for office costs. The in-town occupation cost for Edinburgh stood at euro 568.97 m² (£37 sq ft) per annum, compared with euro 461.33 m² (£30 sq ft) per annum for out-of-town. Glasgow´s in-town cost was euro 561.28 m² (£36.50 sq ft) per annum and euro 384.44 m² (£25 sq ft) per annum for out-of-town.

The King Sturge survey reveals that total occupational costs in prime office markets around the world has not seen positive growth comparable with that of industrial markets. When quoted in local terms, in-town office occupation costs rose by 2.5% in both North America and Asia-Pacific, but fell by nearly 1% on average in Europe, to give a global average of only 1% growth over the second half of 2003.

Campbell Hart, Partner at King Sturge said: 'Cities such as London, Frankfurt and New York continue to suffer from an over supply of sub-lease space which has been released back on to the market by companies who had pre-empted their expansion plans during the boom years of 1999 and 2000. Although the amount of ´grey space´ in these markets appears to have stabilised, vacancy rates remain higher than previous years. Tenants are taking advantage to negotiate cheaper rents especially where they are prepared, and able, to contract long lease terms favoured by investor landlords.'

Source: Scottish Property Network

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