London's West End remains most expensive office market

London’s West End continues to head the list of the world’s most expensive office markets, but Asia dominates overall, accounting for three of the top five markets, according to CBRE's semi-annual Global Prime Office Occupancy Costs survey.

The study also found that rents are rising fastest in the Americas, where real estate fundamentals continue to improve significantly. Overall, the US accounted for five of the 10 markets with the fastest growing occupancy costs.

London West End’s overall occupancy costs of $277 (€204) per sq ft per year topped the 'most expensive' list. Hong Kong (Central) followed with total occupancy costs of $242. Beijing (Finance Street), Beijing (Central Business District) and Moscow ($165) rounded out the top five.

'Economic improvements have continued to trigger strong demand for space in the capital,' commented Phillip Howells, executive director of Central London at CBRE. 'As a result, the market has accelerated significantly over the last 18 months, with leasing activity improving in the core West End market of Mayfair & St James’s in particular. This is evident at the top end of the market with specialised financial occupiers particularly active and rents being achieved significantly in excess of £100.00 per sq ft.'

A shortage of space combined with rising demand has pushed rents higher in London’s West End. With prime space leasing at a premium in this market, and the continuation of steady demand for offices, CBRE anticipates stronger rental growth during the remainder of the year.

Other markets from Europe in the top ten are Moscow ($165 per sq ft), London City ($154 per sq ft) and Paris ($124 per sq ft).

Both Palma de Mallorca, Spain, and Lyon, France, posted double-digit declines in prime occupancy costs, falling 13.0% and 10.8%, respectively, over the past 12 months, a reflection of the effects of the lingering Eurozone crisis.

Richard Holberton, senior director, EMEA Research at CBRE, added: 'EMEA is an interesting region. It has four of the top 10 most expensive office markets, including the world's most expensive, and two of the top fiver risers. Yet, it also accounts for three of the top five fallers. This shows that the EMEA office market is hugely diverse, reflecting an uneven pace of recovery from the European debt crisis which has hit markets for much of the last six years.'