Global growth has stimulated relatively robust leasing activity, particularly in Europe, the Middle East and Africa region, according to the latest Global Prime Office Occupancy Costs report, published by CBRE, a commercial property and real estate services adviser.
As a result, prime office occupancy costs are growing at a faster rate than they were this time last year.
Only the Americas has seen a slowdown, but this is small and it is still the region with the overall fastest annual increase in costs at 3.2%, CBRE said.
Hong Kong (Central) remains the most expensive location in the world, as it has been for the past two years. This is followed by London and Beijing.
Three of South Africa’s major cities feature in the report, namely, Cape Town, Johannesburg and Durban. The latter recorded the largest 12-month increase out of all major cities in the report.
The dominant trend among the top-20 markets with rising prime occupancy costs is strong demand from the finance, technology, and e-commerce sectors.
Momentum also is building in markets linked to resource-based economies, such as Canada, Norway and South Africa, the report said. “The market with the steepest rise, Durban, has also experienced strong demand from the business-process outsourcing companies,” the report said.
Markets with declining prime office occupancy costs are mainly affected by supply/demand imbalances due to newly completed buildings hitting the market, CBRE said. Among the cities which feature on the list is Joburg.
“Since reduced costs due to excess inventory is a relatively short-term event, companies looking for space in these markets should move quickly,” CBRE said.
Prime office occupancy rates Q1 2018