Report: New York among 4 most expensive cities for office space

Real Estate Weekly, March 19, 2003

London, Tokyo, Paris and New York have retained their position as the world's four most expensive cities for office space in this year's edition of Business Space Across the World, produced by Cushman & Wakefield, the global real estate services firm.

The gap has widened between the cost of locating an office in London, Tokyo or Paris and the world's other key business locations. These three top cities have not only experienced less downward pressure on rents, but also suffered to a lesser extent from the appreciation of the Euro.

This year's edition of Business Space Across the World, an annual report looking at the world's most expensive locations for office space, analyzes 209 key office locations in 45 countries.

David Hutchings, C&W's head of European Research, commented: "The threat of war and an increase in geopolitical tensions, as well as the large-scale financial scandals that took place last year, have marred the performance of the world's economies. And this has had an effect on the demand for offices."

"New York remains the international capital of finance and communications, and is a relative bargain versus its global competitors," said Bruce Mosler, president of U.S. Operations for C&W. "That is one of the reasons why New York is a must for global corporations and institutions."

A SF of prime office space in the West End of London is now priced at an average $137.31 to rent each year, compared with $102.56 in Tokyo and $89.28 in Paris. In 4th place is New York's Midtown ($71.53) followed by Moscow ($67.73) and Frankfurt ($63.64), while Hong Kong ($52.49) has continued downward from 5th to 12th position.

Brussels had the biggest increase in the ranking. The "capital of the European Union" climbed 10 spots to 19th on the strength of the Quartier Leopold business district. Brussels was helped by strong demand from tenants, the availability of good quality office space, a low vacancy rate, as well as proximity to the European Union Commission and to good public transportation. Brussels remains strong in light of the proposed enlargement of the EU, concludes the report.

Looking ahead at the global situation for offices, Mosler commented: "Companies that occupy office space are likely to show on-going caution through the rest of this year, particularly while uncertainty surrounding the Iraq crisis exists.

"When the anticipated global recovery does happen, many markets will be in a much stronger position than during the last economic downturn given that the amount of new supply of office space and the new additions of sublease space is expected to slow considerably in 2003."