Hong Kong, Beijing, Shanghai, and Shenzhen rank among the World’s Top 20 most expensive office markets
Occupiers increasingly preferring premium office buildings with sustainability certification
Shanghai, December xx, 2021—JLL's (NYSE: JLL) latest Global Premium Office Rent Tracker ranks China’s eight office markets among the most expensive offices in the world.
Hong Kong Central tops the list, tied by New York’s Midtown as the most expensive office submarket globally. Beijing Finance Street, London’s West End, California Silicon Valley, and Beijing CBD form the top six. Shanghai Pudong, Beijing Zhongguancun, and Shanghai Puxi rank from ninth to 11th, followed by Hong Kong Eastern District and Shenzhen.
JLL World Top 20 most expensive office list
Technology and professional services firms drive rent upwards
The banking and financial services industry dominated demand as tenants, accounting for 42% of premium office space leasing globally. Professional and business services firms are also major players in the premium office market, taking up 17% of space.
Notably, technology firms, particularly those specializing in online platforms, stand second, accounting for 17% of demand for the most expensive markets, with rates hovering above US$100 per square foot annually. This trend is also prominent in China. For example, the rental performance of Beijing Zhongguancun has been exceptional. It ranked 13th globally in 2020 but moved up to the Top 10 this year with annual rent at US$123 per square foot.
Mi Yang, Head of Office Market Research, JLL China, says, "In Beijing, the technology innovation enter of china, tech companies have been expanding rapidly, and their office demand has soared up to over 600,000 square meters this year. Zhongguancun, where numerous tech firms are located, directly benefited from this growth and experienced faster recovery from Covid-19. While office rents in most cities in China and other parts of the world is decreasing, in Zhongguancun it is rising steadily, with merely 2.2% vacancy rate.”
Core location rents are resilient
Despite the pandemic impact on office markets, rental performance remained resilient in core central business districts. In the top 10 cities globally, office rent in core locations is generally higher by 40% to 50% than in non-CBD areas. However, the gap between core and decentralized rental rates substantially widened, making secondary locations more affordable. Los Angeles and Delhi, for example, experienced an increased difference of 11 ppts between primary and secondary rents from what it was a year ago.
Occupancy cost differentials in key cities
Majority of premium office buildings are certified in sustainability
According to JLL research, premium office space worldwide is being redefined with the growing demand for green buildings. Of the premium office buildings surveyed, at least 84% have some certifications in environmental sustainability, such as LEED or BREEAM. The proportion of sustainability-certified buildings is 100% for buildings in the high-end markets. This shows that owners’ sustainability ambitions are turning into actions, irrespective of whether it is through their voluntary application or pushed by occupiers’ green lease demand.
Yet, only 13% of premium office buildings surveyed globally have a health and wellness-related certification, such as WELL or Fitwel, but this is likely to change as tenants increasingly demand healthy building credentials.
Percentage of markets whose most premium building has…
|a sustainability certification|
|a WELLNESS certification|
In the next decade, we will witness the acceleration of decarbonization in the real estate sector. Office owners and landlords, especially those with multiple properties, will evaluate the long-term effect of decarbonization on their asset values. With expertise in this field, we look forward to collaborating with landlords, occupiers, government bodies, research institutions, and technology enterprises, helping them achieve their carbon-neutral goals, " commented Daniel Yao, Head of Research, JLL China.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.6 billion in 2020, operations in over 80 countries and a global workforce of more than 95,000 as of September 30, 2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.