Jones Lang LaSalle research reveals the world’s most
expensive markets for office space, what industries dominate them and where the
future lies
SINGAPORE, 24 October,
2013 — Strong demand from niche financial and technology sectors is driving up
the cost of office space in many cities around the globe, but a new analysis by
Jones Lang LaSalle (NYSE: JLL) reveals the 12 premier office districts have
been the biggest beneficiaries of the trend, witnessing higher competition by
companies for space and driving rent prices to new highs.
JLL’s new list of the
“World’s Most Expensive Office Areas” reflects a variety of global and regional
economic trends and highlights the key factors companies consider when seeking
premier office space. All 12 of the office districts are within the world’s
most internationally connected and easily accessible cities, which are home to
the greatest number of top global corporate headquarters, the world’s top
talent and the highest net worth individuals.
The most expensive office
areas for 2013 are:
1. St James’s, LONDON:
GBP 125 per sq. ft. per year (USD 194 per sq. ft. per year)
Home to world-leading
hedge and sovereign wealth funds, and niche wealth and investment managers, St
James’s personifies the West End’s unparalleled accessibility, luxury amenities
and proximity to clients.
2. Central, HONG KONG:
HKD 105 per sq. ft. per month (USD 162 per sq. ft. per year)
Complemented by first
class hotels, luxury retail, excellent transport links and interconnecting
walkways, Central is the location of choice for the city’s banking and finance
community.
3. Finance Street, BEIJING:
RMB 750 per square meter per month (USD 137 per sq. ft. per year)
A Beijing submarket
planned specifically for highest-tier financial institutions and major
state-owned enterprises, Finance Street also attracts global investment banks
and insurance companies.
4. Rue du Rhône, GENEVA:
CHF 1,150 per square meter per year (USD 116 per sq. ft. per year)
Rue du Rhône is Geneva’s
prime location for private wealth management, banking and luxury retail brands.
News Release
5. Menlo Park, SILICON
VALLEY, CALIFORNIA (USD 111 per sq. ft. per year)
The epicenter of the
technology universe, Sand Hill Road in Menlo Park is home to many venture
capitalists.
6. Kremlin Area, MOSCOW:
USD 1,150 per square meter per year (USD 107 per sq. ft. per year)
Office space in Moscow’s
Kremlin area is popular with Russian and international finance and legal
tenants. New construction is tightly restricted, and that has helped further
boost the value of office space in the area.
7. Fifth Avenue, MIDTOWN
MANHATTAN, NEW YORK: USD 104 per sq. ft. per year
Consistently ranked among
the most expensive shopping streets in the world, Fifth Avenue is also home to
numerous hedge funds looking for top-quality space in Midtown.
8. Raffles Place/Marina
Bay, SINGAPORE: SGD 11 per sq. ft. per month (USD 103 per sq. ft. per year)
The heart of Singapore’s
financial district is served by a world-class subway system and is a vibrant
environment for work, living and play.
9. Golden Triangle,
Champs Elysées area, PARIS: EUR 800 per square meter per year (USD 99 per sq.
ft. per year)
The center of Paris’s
tourism and retailing is also an office hub for high-value-add businesses
including international law firms and banks, and corporate tenants seeking
accessible, high-quality buildings in close proximity to clients.
10. Marunouchi, TOKYO:
JPY 28,600 per tsubo per month (USD 98 per sq. ft. per year)
Marunouchi, located on
the west side of Tokyo Station, is a long-established office precinct where the
lower floors of buildings typically house luxury retail, and higher floors are
office space.
11. Uraniastrasse and
Paradeplatz area, ZURICH: CHF 900 / per square meter per year (USD 91 per sq.
ft. per year)
Uraniastrasse and the
area round the Paradeplatz in the core CBD of Zurich feature excellent accessibility
and amenities, with office space heavily dominated by the banking sector and
private wealth management.
12. Lujiazui, SHANGHAI:
RMB16 per square meter per day (USD 87 per sq. ft. per year)
Lujiazui was transformed
from empty grassland to a bustling financial district in just 20 years and is
now Shanghai’s largest CBD, home to 650 Chinese and international financial
institutions.
Despite the upheavals in
financial markets in recent years, the research points to the financial sector
as the primary demand-driver in these top locations. A general lack of
available space adds an aura of exclusivity in these supply-constrained areas,
luring emerging companies in other sectors, as well retail, hospitality and
tourism attractions.
JLL Director of Research
Jeremy Kelly says the same set of Global Cities will continue to dominate the
list in the years to come, although the order will change with sector-driver
market conditions and the continued rise of the technology and mobile sectors.
For example, Silicon Valley will continue to climb the list as tech-driven
demand continues to push up rental rates.
“With premium rents in
the CBDs of a number of U.S. cities now increasing, we can expect to see
additional U.S. markets ranking among the Most Expensive over the next 24
months,” he said.
Market dynamics can also
have the converse effect, however. “Tokyo was the most expensive market for
office space in the world for many years,” Kelly said, “but it was hit hard by
the global financial crisis and has been surpassed by other Asian power
cities.”