Global prime office rents increase for seventh consecutive quarter

Vacancy rate drops to two year low according to Jones Lang LaSalle’s new index

Article posted: 10 Nov 2011

Despite corporations delaying real estate decisions and facing renewed pressure to drive down costs in the face of economic volatility in Europe and the United States prime office rents across 81 global markets increased by a further 1.1% during third quarter 2011, according to the inaugural Jones Lang LaSalle Global Office Index.

The new Index shows this was the seventh consecutive quarter where prime rents have risen which reflects an 8.2% uplift since the bottom of the market in fourth quarter 2009 and a 5.5% increase year-on-year.

Key findings of the Index show that Asia Pacific office markets had the highest rental growth of 2.5% quarter-on-quarter. The Americas followed with an increase of 1.1% in Q3.  However, economic concerns in Europe have weighed down on markets and growth has come to a virtual halt, from 2.1% in Q2 to 0% in Q3.

Real estate markets are diverging, with emerging markets demonstrating strong year-on-year performance, with increases in Beijing (+50.6%), Moscow (+41.2%), Shanghai (+23.7%) and Sao Paulo (+20.4%). Other Asia Pacific markets also registered positive growth, including Jakarta (+48%) and Hong Kong (+20.6%).

The ongoing strength of the global technology sector meant that Silicon Valley (+60%), Bangalore (+19.7%) and San Francisco (+17.1%) also had positive rental performance.  Equally, demand from the commodities sector supported strong year-on-year growth in Perth (+26.9%).

The largest quarterly falls in rents were experienced in Mexico City, Brussels, Vancouver and Canberra, who all experienced drops between 2 and 4%. Office space in Dublin, Ireland was also subject to such a drop.

Meanwhile activity levels within the regional office space market in the UK are heading towards a year of ‘much the same as the last ’ with aggregate take-up levels for the first nine months of 2011 indicating that year-end totals will be similar to 2010 levels.

In addition, according to the latest Central London property market review from CBRE take up of office space in Central London rose to 2.7m sq ft in the third quarter of 2011 - the strongest performance of the year to date.

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Posted by Sara