New York: The average cost of occupying office space shrank by 2.8% globally in the first quarter from a year earlier, with the world’s financial capitals absorbing the most damage from the global recession, according to a report by real estate services company CB Richard Ellis Inc.
“The great global recession has clearly taken its toll on the world’s office markets, particularly those with significant concentrations of financial industry employers,” Raymond Torto, CBRE’s global chief economist, said in a statement.
“Occupiers are now in a strong position to procure prime space.”
Occupancy costs fell most sharply in Singapore, midtown New York and Hong Kong’s central business district, according to CBRE Research and Consulting’s semiannual global office occupancy costs survey released on Wednesday.
The average occupancy cost dropped 34.4% from a year earlier in Singapore, 31.5% in midtown New York and 29.9% in the Hong Kong central business district. Boston and Hong Kong citywide saw declines of 29.7% and 28.5%, respectively.
Midtown New York ranked 21st among the 50 most expensive office markets, down from 15th.
When measured in dollars, Tokyo’s inner central district was the most expensive at $183.62 per square foot. London’s West End fell from No. 1 to No. 2, with the cost of occupancy tumbling to $172.62 per square foot from $300 a year earlier.
Moscow was third at $170.24.
Mumbai, New Delhi, Paris, Dublin, Milan, Luxembourg City, Geneva and Ho Chi Minh City were also more expensive than New York in the first quarter.
As the components of rent differ, the survey measures the same costs across 173 markets.
The 2.8% decrease in average global occupancy cost was in stark contrast to the 8% year-over year rise reflected in the prior report, which measured the changes in the third quarter from the same period in 2007.
Some markets, such as Charlotte, North Carolina; Marseilles, France; and Perth, Australia, recorded cost increases over the past 12 months, but these gains were due to exceptional local market conditions, such as the completion of a top-quality new building in a market where there had been none.
In other markets, occupancy costs reversed direction during the 12 month period and started to decline, but still remained above year-earlier levels.