Jakarta, Dublin & Boston to see highest
rental growth rates through to 2015
NEW
YORK – December 3, 2013 – Cushman & Wakefield, the world’s largest
privately-held commercial real estate services firm, today issued its latest
Global Office Forecast report highlighting the continuing trends of efficiency
and quality as key drivers of demand and asking rents in commercial office
buildings.
The
global office market is poised for slow steady growth in 2014, while 2015
should be more robust as recovery takes hold and business gains renewed
confidence. Jakarta, Dublin and Boston are the regional leaders among the top
cities forecasted to see the highest office rental rate growth through 2015.
“Reduced
occupancy footprints and an upgrade to better quality space are two global
trends that show no sign of letting up anytime soon,” said Carlo Barel di
Sant’Albano, Executive Chairman of Cushman & Wakefield. “The workplace is
becoming more complex and inter-related with business performance and
objectives, with modern efficient space seen as promoting increased
productivity and workplace satisfaction. In certain instances, new construction
can achieve both goals.”
Asia Pacific
More
subdued growth in the region should cause leasing conditions to remain less
buoyant over the next year with rents expected to advance by 1-2%. Rental
growth rates will pick up in a number of core and emerging locations led by
Tokyo and Manila, where supply risks are limited, upon the resumption of
stronger economic growth.
“With
the abundance of new supply especially in the emerging markets, it remains a
great time to be an occupier,” said Sigrid Zialcita, Managing Director of
Research for Asia Pacific. “However, Jakarta is among the exceptions with rents
on track to rise nearly 30%, the highest forecast globally for the second
consecutive year with rates more than double the level in 2011 when this report
was first released.”
“Strong
demand, relatively low supply, record occupancy levels, and rentals coming-off
an historic low base, are the factors which have driven this significant
growth,” explained Arief Rahardjo, Head of Research & Advisory, Cushman
& Wakefield Indonesia. “Demand in 2014 is still projected to be 25% more
than in 2013, but higher volumes of new supply will likely ‘soften’ the rate of
growth going into 2014 & 2015 to 15% and 10% respectively, compared to the
30 – 40% annual growth seen over the last 2 -3 years,” Arief added.
Considering
the prevalence of high rents and continued increases within Jakarta’s ‘golden
triangle’, many tenants are taking a long, hard look at devising ways to
achieve efficiencies. “Given the widening rental gap between CBD and non-CBD
office buildings we predict an increasing trend to decentralization by tenants,
or at minimum relocation of ‘back-of-house’ operations to lower cost
locations,” explained David Cheadle, Managing Director of Cushman &
Wakefield’s Indonesia business.
Americas
Technology
and energy continue to be the main drivers of the U.S. real estate recovery. As
a result, Boston is expected to see continued strong demand pushing prime
asking rents upwards by 22% through the forecast period, while Dallas is
enjoying a resurgence of activity with rents expected to rise approximately 3%
annually. Softening near-term demand will result in an oversupply situation in
Canada, Mexico and Brazil. Rents will decline modestly in Canada and Mexico
while widespread rental growth in Brazil will not take place until 2016.
"Office
market conditions will vary widely across the Americas in 2014, as economic
recovery favors some sectors, along with the markets in which they are
located,” said Maria Sicola, Executive Managing Director and head of Americas
Research. “Steady leasing activity related to the adoption of efficient new
workplace strategies that include consolidation and densification will
continue."
EMEA
Major
international cities such as London, Stockholm and Frankfurt have led in the
European leasing recovery, but others are now joining in, including some from
the formerly distressed fringe. Dublin, for example, has bounced back strongly
with no new construction underway and double-digit rental growth anticipated.
“Occupiers have a clear preference for quality space but many are encountering supply constraints in an increasing number of cities,” said David Hutchings, Partner and Head of Cushman & Wakefield’s European Research Group. “This is pushing rental growth and occupiers will have to move sooner than expected to secure deals on the decreasing amount of quality space that is available.”
“Occupiers have a clear preference for quality space but many are encountering supply constraints in an increasing number of cities,” said David Hutchings, Partner and Head of Cushman & Wakefield’s European Research Group. “This is pushing rental growth and occupiers will have to move sooner than expected to secure deals on the decreasing amount of quality space that is available.”
