Published 14 January 2008
International property advisor DTZ said results from its annual global office occupancy costs survey, out last week, pointed towards strong occupier demand across all key global regions despite fallout from the US sub-prime crisis.
London’s West End continued its hold as the most expensive location globally, with Hong Kong second and London City third. Singapore skyrocketed up the world rankings, from 55th place to 13th in the past year, highlighting the sustained strong demand for prime office space in the Asia Pacific region.
Auckland was New Zealand’s most expensive city in 68th place, jumping 5 places from last year with a total office occupancy cost of $NZ9755/workstation/year. Wellington jumped 9 places to rank 91st, with an occupancy cost of $NZ7632/workstation/year, and Christchurch dropped 4 places to 122 with an occupancy cost of $NZ5276/workstation/year.
DTZ NZ’s national research director, Ian Mitchell, said Auckland’s position in the survey ranking placed it ahead of other large cities such as Los Angeles, Montreal & Canberra.
He said it indicated that, while the office market enjoyed a buoyant year in 2007, the shortage of space, particularly in Auckland, would force employers to use space more intensively or seek lower-cost alternatives outside the cbd.
Sydney was the seventh most expensive city in the Asia Pacific region and the highest-ranked Australian location at 44 on the global list. Brisbane was placed at 50, dropping 10 places from 2007, and Melbourne remained steady on 98.
The office occupancy survey also paints a reasonable outlook for the year ahead. Mr Mitchell said the survey outlined the expectation that occupier market fundamentals would remain healthy, although some probability of weakening demand remained if the economy slows and affects jobs growth in core sectors.
Globally, 77% of the 137 locations surveyed expect occupancy costs to increase in 2008 while a further 22% of the locations expect occupancy costs to stabilise, reflecting the generally positive economic prospect.
The 10 most expensive office locations by occupancy costs in the DTZ survey are:
London (West End), $NZ38,233 ($US31,160), 34% year-on-year increaseHong Kong, $NZ33,791 ($US27,540), 27%London (City), $NZ25,387 ($US20,690), 17%Paris, $NZ25,067 ($US20,430), 15%Tokyo (central 5 wards), $NZ22,614 ($US18,430), 15.5%Dublin, $NZ22,245 ($US18,130), 14.7%New York (Midtown), $NZ20,871 ($US17,010), 3.7%Palo Alto, California, $NZ20,699 ($US16,870), 50%Frankfurt, $NZ20,652 ($US16,830), 25.5%Oslo, $NZ20,540 ($US16,740), 56.7%.
Auckland, 68, $NZ9755 ($US7950), 30.5%Wellington, 91, $NZ7632 ($US6220), 27.5%Christchurch, 122, $NZ5276 ($US4300), 20.4%.
Occupancy costs are defined as the average total cost of leasing prime net usable space. This is defined as modern, well specified office space of 10,000ft² (929m²) within a prime central business district location. They include rent & outgoings, such as maintenance costs & property tax, if these are normally payable by the occupier, but exclude rent-free periods, fitting-out costs & other leasing incentives.
Attribution: DTZ release, story written by Bob Dey for this website.