HONG KONG-The city, seen as a global financial center alongside large office centers as New York City and London, has rebounded significantly better than its counterparts since the recession. The rise of Hong Kong as a premier office hub is attributed to the strength of the Asian markets, according to a new report released today by CB Richard Ellis.
According to “Hong Kong, London, New York: From Recession to Recovery,” the city here has gained ground on the traditional leaders of the office sector. This move is partially due to Hong Kong suffering a much smaller proportionate drop in financial services jobs during the downturn, as well as being buoyed by the churning mainland China economy and a decline in new office development in 2009 and 2010. Hong Kong saw a rapid GDP growth of about 7% in 2010, with a 5.8% rise in finance sector jobs
Pam Murphy, SVP of Market Data Services for CBRE, says that Hong Kong absorption stayed positive during the recession, as New York City dropped to negative 12% in 2008 and London saw smaller losses. All three had positive absorption in 2010, and London and New York City still are on top, she says. “Historically, New York City and London have led by significant margins, but the Asian markets are gaining a lot of ground,” she tells GlobeSt.com.
London saw 15 million square feet of absorption in 2010, including JP Morgan’s acquisition of the former Lehman headquarters building in Canary Wharf and two major pre-leasing spots by UBS and Bloomberg, but weak economic fundamentals caught the city in the first quarter 2011 and the pace of leasing activity has slackened.
Deals in New York City have increased dramatically since 2009, with GDP growing 1.6% in 2010 and the city gaining about 68,000 jobs. Major deals have included Societe Generale’s relocation to 245 Park Ave. and Proskauer Rose’s move to 11 Times Sq. However, the Manhattan market recorded large-scale negative net absorption in 2008 and 2009, and the city, while one of core market leaders in the United States, has further to go to keep its top spot in the global market.
“We see an increasing pace of growth in New York City,” Murphy says. “We’ve seen rental growth surge, and there’s getting to be a limited amount of space in the Class A market.”
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