(Mark Your Calendars: RealShare REAL ESTATE 2012, March 22nd in Los Angeles).
LOS ANGELES-The CBRE global office rent and global capital value indices held steady in Q4 2011, increasing by only 0.48% and 0.44%, respectively. Compared with year-end 2010, the indices measured increases of 5.0% for global rent and 8.2% for global capital, reflecting stronger growth in the first half of 2011.
According to Raymond Torto, CBRE global chief economist, “After a good start in 2011, global office rental rates and capital value recoveries were delayed in the fourth quarter by the dominant global macro-economic issues.” He adds that “the recoveries in commercial real estate are only delayed not denied, as new construction pipelines are sparse except in a select number of markets.”
The uncertain global economic backdrop continued to contribute to occupier and investor caution, says CBRE, “thus diminishing the strength of the global office commercial real estate recovery.” And while both global indices continued to edge upward slightly according to the firm, the quarterly growth rates were notably below the rates previously seen in the first half of 2011.
For example, the firm says that since the CBRE Global Office Rent Index began increasing in Q2 2010; the average quarterly growth rate through Q3 2011 was 1.2%. Similarly, the CBRE Global Office Capital Value Index reached bottom in Q4 2009, and its quarterly average growth rate through Q3 2011 was 2.2%. Both the Global Capital Value Index and Global Rent Index are 10% below their pre-recession peaks, says the firm.
According to CBRE numbers, thanks to slight gains in the office-using employment sector in the US, a moderate resurgence in demand has gradually reinvigorated the Americas Rent Index, which increased 0.95% this quarter, “making this the strongest quarterly gain for all three global regions.” However, in order for the Americas Index to return to pre-recession rent levels, the firm says that employment across all economic sectors must noticeably improve.
While the Asia Pacific Rent Index rose 2.8% on average over the past six quarters, it edged up only 0.27% in Q4 2011, says CBRE. “Despite having experienced the relatively strongest rental recovery, the region currently stands the farthest below its pre-recession peak.”
The uncertainty surrounding the European Sovereign Debt Crisis has contributed to occupier caution, adds the firm. Remarkably, though, EMEA’s Rent levels fell the least and stand the closest of all regions to reaching pre-recession levels.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
