China accounts for four of the top 10 most expensive office markets globally

JLL’s latest Global Premium Office Rent Tracker (PORT) revealed that Hong Kong – Central, Beijing – Finance Street, Shenzhen – Futian and Beijing CBD are among the world’s 10 most expensive locations for premium office rents.

December 18, 2018

SHANGHAI - JLL’s latest Global Premium Office Rent Tracker (PORT) revealed that Hong Kong – Central, Beijing – Finance Street, Shenzhen – Futian and Beijing CBD are among the world’s 10 most expensive locations for premium office rents.

JLL PORT compares occupancy costs for premium office buildings across the world’s leading real estate markets. This fourth edition includes 72 office submarkets across 61 cities.  

The Hong Kong – Central submarket continues to be the world’s most expensive market, around 60% more expensive than New York’s Midtown market, and nearly 75% more expensive than London’s West End market. Beijing – Finance Street follows closely in the 4th place; Shenzhen – Futian at 7th; Beijing – CBD at 8th; and Shanghai, Pudong at 11th.

“China’s strong market fundamentals, increasing occupancy costs and strong demand from Chinese firms for premium office space led to Hong Kong, Beijing and Shenzhen vaulting into the top end of the list. The high costs have made affordability continue to be a concern and are encouraging decentralization into alternative office locations in these top tier markets,” says KK Fung, CEO of Greater China at JLL.

Top 10 most expensive premium office districts in the world

 

2018

Occupancy cost (US$/sq ft/year)*

1

Hong Kong, Central

$338

2

New York, Midtown

$212

3

London, West End

$195

4

Beijing, Finance Street

$189

5

New York, Midtown South

$182

6

Silicon Valley

$158

7

Shenzhen

$155

8

Beijing, CBD

$153

9

Tokyo, Marunouchi

$148

10

Delhi, Connaught Place

$142

11

Shanghai, Pudong

$131

12

Hong Kong East

$122

13

Tokyo, Shinjuku

$118

14

Los Angeles, Westside

$114

15

San Francisco

$111

16

Singapore

$108

17

New York, Downtown

$107

18

London, City

$105

19

Shanghai, Puxi

$102

20

Sydney

$102

*Total occupancy costs are calculated by combining the net effective rent with additional costs (e.g. service charges, taxes).

Financial services companies are willing to pay for premium office space

The banking and financial services industry is the top occupiers of premium office space globally, and is the leading sector in more than half of the 72 markets covered.

“High-value, high-margin businesses in financial services such as private, corporate and investment banking firms, rent premium office space in Beijing, Shanghai, Tokyo and Singapore. While cost remains a key factor, these companies prioritise access to talent and the need for amenities when selecting their next office location. They target premium quality buildings to attract and retain top talent, which also helps to enhance their brand image,” says Jeremy Sheldon, Managing Director of Markets, JLL Asia Pacific.

Corporate occupiers are seeking to consolidate and streamline their portfolios in strategic locations. There is a growing recognition of the role that real estate plays in talent attraction and retention, as well as the importance of transport connectivity, local amenities and the quality of digital infrastructure - factors that organizations consider when choosing their next office location.

Download the Premium Office Rent Tracker report here.

Notes:

In this fourth edition of JLL’s Premium Office Rent Tracker (PORT), we compare like-for-like occupation costs across 72 major office markets in 61 cities. The 2018 edition includes a further 18 markets from 2017, where we included 54 major markets in 46 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.

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About JLL:

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with operations in over 80 countries and a global workforce of 88,000 as of September 30, 2018. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com

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