The latest annual Cushman & Wakefield Office Space Report takes a look at the world’s commercial markets and gives us a comprehensive overview on office costs all around the globe enabling companies to determine lucrative markets.
Data for this report was collected from December 2007 up until December 2008. The report shows that no market escaped from the global slowdown. However, the financial impact of the economy was felt in various ways all around the world. One of the more significant changes (besides the overall state of world economy) was the rental increase by only a 3 percent margin, whereas the year previously it rose by 14 percent.
The strongest office rental growth was seen in South America, the Middle East and Africa. The greatest decline in rental office markets were seen in Asia, especially in places like Hong Kong, Singapore and Tokyo.
In regards to expense, the market hasn’t changed much from the year before with Hong Kong topping the charts as the most expensive location knocking London from first place. Due to heavy currency fluctuations and falling property values in the West End especially, London ranked at 3rd after Tokyo on second.
Another riser from the 2007 listing was Dubai who clocked in at 5th place on the rankings of most expensive office spaces.
Kuala Lumpur saw a massive 58 percent increase in rental growth which was the result of strong demand in the city during the first three quarters of 2008. Turkish cities such as Izmir, Ankara and Istanbul also recorded good growth figures.
While the real estate market in the US was subject to a lot of speculation last year, their rental office market increased by 4 percent. Canada also saw slight growth of 6 percent.
Europe overall only grew by a slight margin of 2 percent. However, they did show strong characteristics of quality supply and strong occupancy throughout the year.
As Eastern Europe’s market grinded to a drastic halt, so did their rental office market.
A strong contender for overall rental growth last year is China who recorded a 12 percent overall increase in rental growth. However, events did take a turn for the worse as the market weakened toward the end of the year.
Projected Market Outlook
The outlook for this year isn’t as optimistic due to the slowing markets everywhere. Vacancy rates are set to peak in 2010 since many developments are yet to reach finishing stage.
On the up side, there is still evidence that some markets are in dire need for modern, updated property, preventing oversupply due to delayed projects.
The short-term outlook is definitely subdued and time will tell what happens as economies pick up their reigns yet again.