CHICAGO, IL- DTZ has just released its annual Global Occupancy Costs-Offices survey and revealed that the costs for office space in North Asia increased by 6.3%. The United States offered a sharp contrast. Costs fell 10.9%, largely driven by the successful attempts of American tenants to increase workplace efficiency and cut down on the amount of space used by employees. On average, however, American workers still have the roomiest workstations in the world.

“The U.S. was undoubtedly one of the stories of the year, with occupancy costs per workstation falling in every city,” said Karine Woodford, the head of occupier research at DTZ, a London-based company. “Demand for space was low, reflecting a sluggish labor market and weak corporate sentiment, but the biggest reason for the decline was a trend across the board for greater space efficiency.”

The amount of space allotted on average to each American worker dropped 11.8%, DTZ found. Washington, D.C. led the nation with a drop of 17%, followed by Los Angeles with 14%.

DTZ calculated the occupancy costs per workstation in 126 locations in 49 countries. They included the costs of rent, maintenance and taxes. They measured the cost per workstation to account for the different standards of office size and use in the countries studied. The global average increase in costs was only 1%, leaving both the U.S. and North Asia, especially cities such as Beijing and Jakarta, far outside the norm.

The analysts attributed the steep Asian increases to “strong domestic consumption and activity from non-financial sectors eager to tap into the region's brighter growth prospects.” Costs in Beijing rose 17.7% and 20.7% in Jakarta.

But costs in the Asian office market vary widely. Although many of the provincial Asian cities studied, such as Hyderabad, Xi'an and Chengdu, have among the lowest costs, Delhi, Shanghai and Beijing are already more expensive than all 15 American cities studied, with the exceptions of New York and Washington.

The near-term future of occupancy costs could vary widely based on how policymakers in several continents behave, according to the report's authors. European markets, for example, could go into a sustained decline if countries exit the euro, while in the same scenario, Asian costs will only increase 1% instead of the 5% expected if policymakers help avoid any recurrences of recessions. And if the global economy not only avoids recessions, but experiences a “corporate reawakening,” the Asian Pacific region will undergo a large increase in rents, about 8%, while Europeans and Americans will see more modest growth.

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Brian J. Rogal

Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.