Hong Kong Central remained the most expensive office market in the world, according to CBRE’s annual Global Prime Office Occupancy Costs report.

Hong Kong Central’s overall prime occupancy costs of US$307 per square foot (US$3,305 per sq m) per year topped the “most expensive” list, followed by London’s West End at US$235 per square foot (US$2,530 per sq m), Beijing’s Finance Street at US$201 per square foot (US$2,164 per sq m), Hong Kong’s Kowloon at US$190 per square foot (US$2,045 per sq m), and Beijing’s Central Business District at US$189 per square foot (US$2,034 per sq m).

Global prime office occupancy costs—which reflect rent, plus local taxes and service charges for the highest-quality, prime office properties—rose 2.4 percent year-over-year, with the Americas up 3.2 percent; Europe, Middle East, and Africa (EMEA) up 2 percent; and Asia Pacific (APAC) up 1.7 percent.

“For the first time in this cycle, prime office occupancy cost growth was consistent across all regions,” said Richard Barkham, global chief economist at CBRE. “Global economic growth has stimulated robust leasing activity, particularly in EMEA and APAC. While occupancy cost growth in the Americas slowed slightly compared to a year earlier, it remains the region with the overall largest increase in costs. We expect global office occupancy costs to increase by approximately 2 percent in the year ahead.”

Occupancy cost increases in Durban, South Africa, fueled by strong demand from business process–outsourcing companies, were the highest year-over-year overall, followed by Bangkok, Marseille, downtown Vancouver, and Oslo.

Downtown Vancouver showed the largest increase in the Americas, followed by downtown Manhattan, downtown Toronto, suburban Los Angeles, midtown/south Manhattan, and downtown Dallas. Costs in midtown/south Manhattan reached an all-time high as strong demand for premium space continued.

In Asia Pacific, Bangkok had the highest growth, followed by Hong Kong Kowloon, Singapore, Melbourne, and Wellington. Durban, Marseille, Oslo, Stockholm, and Berlin led EMEA in occupancy cost growth.

“The dominant trend among markets with notably rising prime occupancy costs is strong demand from the finance, technology, and e-commerce sectors,” Barkham said. “Markets with declining occupancy costs are primarily affected by supply/demand imbalances resulting from new completions. Since reduced costs due to excess inventory tend to be relatively short lived, companies looking for space in those markets should move quickly.”

10 Most Expensive Markets
(US$ per square foot per annum, as of 1Q 2018)

Rank Market Occupancy cost
1 Hong Kong (Central) $306.57
2 London (West End) $235.01
3 Beijing (Finance Street) $200.91
4 Hong Kong (Kowloon) $189.56
5 Beijing (CBD) $189.44
6 New York City (midtown Manhattan) $183.78
7 New York City (midtown/south Manhattan) $171.56
8 Tokyo (Marunouchi/Otemachi) $171.49
9 New Delhi (Connaught Place/CBD) $153.26
10 London (City) $144.95

Largest Annual Changes in Occupancy Costs
(local currency and measure, as of 1Q 2018)

Top 5 Increases

Rank Market % change
1 Durban, South Africa 21.4
2 Bangkok, Thailand 16.9
3 Marseille, France 16.7
4 Vancouver (downtown), Canada 16.1
5 Oslo, Norway 15.1