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SHANGHAI, 6 December 2017 - Cities in China are among the priciest in the world when it comes to renting premium office space, according to JLL's latest Premium Office Rent Tracker (PORT).
The new report reveals that half of the world's most expensive locations for premium office rents are to be found in Greater China, with Hong Kong's Central coming out on top, followed by New York's Midtown and London's West End.
Beijing's Finance Street follows close behind in 4th place, the Chinese capital's CBD is ranked 7th, Shenzhen's Futian district is 8th, and Pudong in Shanghai comes in 10th.
"China's strong market fundamentals, increasing costs and ongoing demand for premium office space have led to Hong Kong, Beijing, Shenzhen and Shanghai vaulting into the top end of the list," says KK Fung, managing director of Greater China at JLL.
"Looking at China, we're seeing companies fill up high-quality completions in Beijing, relieving pent-up demand as they upgrade to better offices. Meanwhile, domestic financial services firms are driving demand in Shanghai's CBD. Established firms in China continue to set up offices in Beijing and Shanghai to extend their national footprint and this will likely drive even more demand for office space," explains Mr Fung.
Hong Kong's Central continues to be the world's most expensive office sub-market. At US$323 per square foot per year, rents set corporate occupiers back close to 70 per cent more than for comparable buildings in either New York's Midtown or London's West End. Together with Delhi (ranked 6th) and Tokyo-Marunouchi (ranked 9th), Asian markets now dominate the world's most expensive premium office rental locations.
Top 10 most expensive premium office rental locations in the world:
Cost per square foot (USD)
Hong Kong, Central
New York, Midtown
London, West End
Beijing, Finance Street
By contrast, Asia's economic diversity also means that it offers some of the world's most competitively priced premium space, with Kuala Lumpur, Manila and Bangkok comprising the top three most affordable premium office locations globally.
Tech companies are more willing to splurge on premium office space
Asian cities with a strong tech presence such as Beijing (ranked 4th), Shenzhen (ranked 8th), and Tokyo (ranked 9th) have some of the highest premium office rents.
"We continue to see a greater number of companies from the technology sector targeting premium buildings to attract top talent and to enhance their brand image," says Jeremy Sheldon, Managing Director, Markets and Integrated Portfolio Services, JLL Asia Pacific. "We've observed a significant number of tech occupiers upgrading their premises from serviced to proper offices, and from Grade B to Grade A space in Asia Pacific."
While cost is a key factor, companies selecting their next office location are prioritizing access to talent, adds Mr Sheldon.
"Firms are likely to continue focusing on office layouts that have innovative space offerings to make sure they meet employee needs, while driving effectiveness and engagement levels," he says. "This includes providing employees with more flexibility and choice over their working environment. High quality services, from food and beverage to recreation spaces, gyms and space to support well-being, are likely to become standard features in premium locations."
Download the Premium Office Rent Tracker report here.
In this third edition of JLL's Premium Office Rent Tracker (PORT), we compare like-for-like occupation costs across 54 major office markets in 46 cities. The 2017 edition includes a further 19 markets from 2016, when we included 35 major markets in 31 cities of differing function and evolution.
Premium office rents refer to the 'top achievable' in units over 10,000 square feet (or approximately 1,000 square metres) in the premium building in the premier office district of each city. In tall buildings, the middle zone is used as the benchmark. The report excludes rents that represent a premium level paid for a small quantity of space or highly prestigious units where a significant premium applies.
Total occupancy costs are calculated by combining the net effective rent with additional costs (e.g. service charges, taxes).
The regional average is calculated based on all the total occupancy costs for the 20 tracked markets in Asia Pacific, as per below:
Total occupancy cost(USD)
Beijing, Finance St
Hong Kong East
Top 10 most affordable premium office rental locations in the world:
Paris, La Defense
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JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $145 billion. At the end of the third quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of over 80,000. As of September 30, 2017, LaSalle Investment Management had $59.0 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.
JLL has over 50 years of experience in Asia Pacific, with 36,900 employees operating in 96 offices in 16 countries across the region. The firm won the ‘World’s Best’ and ‘Best in Asia Pacific’ International Property Consultancy at the International Property Awards in 2016 and was named number one real estate investment advisory firm in Asia Pacific for the sixth consecutive year by Real Capital Analytics. www.jll.com/asiapacific
In Greater China, the firm was named ‘Best Property Consultancy in China’ at the International Property Awards Asia Pacific 2016, and has more than 2,200 professionals and 14,000 on-site staff providing quality real estate advice and services in over 80 cities across the country. www.joneslanglasalle.com.cn
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