London's West End ranks 2nd in world office ranking

London’s West End district is the second most expensive business location worldwide after Hong Kong Central, according to CBRE’s semi-annual Prime Office Occupancy Costs survey.

Asian markets took six of the top 10 most expensive markets in this year’s survey, while San Francisco in the US had the strongest year-over-year increase in prime office occupancy costs with a 36.4% rise driven by its hot technology sector.

Hong Kong Central led the list with overall occupancy costs of $246.30 (EUR 187) per sq. ft. per year, topping the $219.81 recorded for London’s West End. Tokyo was the third most expensive market for office space, followed by Beijing’s CBD and New Delhi’s CBD. Other Asia-Pacific markets in the top ten include Beijing-Finance Street (6th) and Hong Kong-West Kowloon (7th).

Despite the economic downturn, occupancy costs increased by an average of 2.1% worldwide over the past year, led by the Americas with a 5.2% annual increase and Asia Pacific with a 2.6% rise. EMEA continued to be plagued by economic recession in much of Europe, pushing prime occupancy costs down 0.4%. Prime office occupancy costs increased in 74 markets, decreased in 37 office markets and remained unchanged in 22 markets.

‘The global office market recovery cooled over the past year, hampered by the ongoing European debt crisis, a deceleration of growth in emerging markets and ubiquitous uncertainty created by the “fiscal cliff” in the US,’ said Raymond Torto, CBRE’s global chief economist. ‘However, tight market conditions, strong demand for high quality space and low levels of new construction continue to drive up occupancy costs in many prime office markets across the globe,’ he added.

CBRE tracks occupancy costs for prime office space in 133 markets around the globe. Of the top 50 ‘most expensive’ markets, 19 are in EMEA, 18 are in Asia-Pacific and 13 in the Americas.