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.
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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