Office Rents Tumble in Major Centres, Up Elsewhere

Nick Parmee

25 November 2008

Office rents in London’s West End, midtown Manhattan and Tokyo fell in the third quarter for the first time for nearly seven years, according to the latest CB Richard Ellis Group global survey.

The total office occupancy cost in the West End was £139.50 per square foot a year in the 12 months to 30 September, down 5.1 per cent from a year earlier. Rents in London, midtown Manhattan and central Tokyo last fell over a year in January 2002.

Rents globally are likely to fall for the rest of this year and the first quarter of 2009 as the financial crisis spreads throughout the world’s economies, CB Richard Ellis’s global chief economist Raymond Torto said.

As financial centres showed falls, office costs in the 172 markets CB Richard Ellis tracks increased 8 per cent on average in the past year, almost twice the global inflation rate. Three of the five fastest-growing cities were in the Middle East, with costs up the most in Abu Dhabi, with a 95 per cent rise.

Even with the rent decline, London’s West End remained the world’s most expensive office market in the third quarter, followed by Moscow - where office costs rose 30 per cent to $234.73 a square foot - and Hong Kong’s central business district, where they rose 29 per cent to $231.59.