But Asia continued to dominate the world’s most expensive office locations, accounting for three of the top five markets.
According to the new CBRE Global Research and Consulting’s semi-annual Global Prime Office Occupancy Costs survey, rents are rising fastest in the Americas, where real estate fundamentals continue to improve significantly. Overall, the U.S. accounted for five of the 10 markets with the fastest growing occupancy costs. These markets were Seattle (Suburban), San Francisco (Downtown), San Francisco (Peninsula), Houston (Suburban) and Houston (Downtown).
Claudia Chistova, Head of Office Research CBRE in Russia, said: “Rental rates for Moscow office remain one of the highest in the world. So, Moscow has the 5th rating position. Having reached their post-crisis level in Q3 2011, Prime Class A rents did not change throughout 2012 – H1 2014. The rents vary from $1,050 up to $1,200 per sq m net of OpEx and VAT. Due to the limited demand for Class A space centrally located, the rents remain flat. During the last several years cost saving strategy is one of the major drivers for tenants, that’s why the majority of deals take place in decentralized office projects (around 50% of the total take-up volume). Another factor influenced tenants behavior in H1 2014 is negative geopolitical situation and forecasts for deterioration of economic performance of Russia. That’s why many occupiers continue to exercise caution in their expansion plans. We expect the tenants to start their relocation projects in H2 2014 if the shifts in geopolitical situation occur.
Due to the economic recovery in USA and Western Europe, in Q1 2014 it was registered the increase of demand for high quality office space centrally located. Limited pipeline of new office projects in the city center and, as a consequence, low vacancy rates, push the Prime rents to grow in USA, Western Europe and some Asian markets.
According to the pipeline of projects announced for delivery in 2014 in Moscow, new supply is expected to be around 1.4 mln sq m. Considering the large volume of new supply and limited demand for office space, we expect the vacancy level to increase and the rents to remain under pressure. However, due to the limited new office development in the city center and recovery of demand of “Prime” tenants for whom the central location is a part of their business strategy, Prime rental rents will go up in the long term.”