Much of the global rental growth can be seen in Asia, led by India and China. "China is a strong growth area," CBRE's chief economist Steven Dunn tells GlobeSt.com. "And it's growing so fast in the office services sector."
With a 69% increase in occupation costs in the last 12 months, Mumbai's Nariman Point submarket has seen the greatest rent appreciation. At $93 per sf, the area broke into the top 10 most expensive markets. India, Dunn points out, is populated by more than just call service centers. "There is a middle class that needs to be serviced." Dunn adds that legislative changes expected this year could bring about a lot of development opportunities for foreign investment. "That demand for space is not going to go away soon." Elsewhere in Asia, Hong Kong occupancy costs jumped 50% to $102 over the last year.
London's West End remains the world's most highly priced business district at $186 per sf. Occupancy costs are up 10% since last year and are 30% higher than the next most expensive submarket.
Only four North American markets are in the top 50--Midtown Manhattan, Washington, DC, Toronto and Calgary. Washington, DC continues to benefit from a steady federal expansion, which is fueling a solid demand for space. Occupancy in Midtown Manhattan is still the most expensive in the US at $55 per sf.
"There really hasn't been a lot of building of classical downtown office space and that's a good thing," Dunn says. "As long as there is demand, rents will keep going up."
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