A new report shows that Tokyo, Japan is the most expensive city to rent office space in. The report shows the average cost of opening an office in Tokyo is around €1,441 per square metre per year.
Tokyo has beat Hong Kong as the most pricey location to open up office space. Hong Kong was also beaten by London‘s West End. Prices for office space in Hong Kong have fallen to €1,207 per square metre per year.
Cushman & Wakefield, who conducted the report, say that the office space market really suffered during the recession, and demand fell greatly all over the world. Most cities recorded a drop in rents for the first time, during 2009. The report also confirms the drop in new building work, where developers instead converted existing space or sub-let offices. However this is having a knock -on effect in some cities where demand has increased, such as London, leaving office space scarce and competition fierce.
The largest rent price drops were recorded in Singapore, Tokyo and Hong Kong, where drops of up to 45% occured. The worst hit city for this decrease was Ho Chi Minh City, Vietnam, office space rent prices dropped by over 50%. Kiev and Dublin were similarly affected in Europe. Rents in the US dropped by 7% but South America remained fairly stable.
Cushman & Wakefield have predicted that rents overall across the world will fall to their lowest in the middle of this year, but they added that the outlook in general is more positive than it may sound.
“Demand for office space in Hong Kong’s key business districts started to pick up towards the end of 2009. We see 2010 as a year for tenants to take advantage of the rare vacancies and significantly discounted rents before the market rebounds,” comments John Sui, general manager for Cushman & Wakefield, Hong Kong.
They have predicted a general rise in demand as the recession turns to recovery across the world, office space markets in City of London and Oslo are already making a strong recovery.
In general it is a positive report, despite the falls in rent, this time for recovery in the office space and commercial property industry is finally ahead of us.