Chicago (downtown) ranked in the top 50 for prime office occupancy costs in the world, and, came in fourth for the largest 12-month increase in the nation, according to CBRE Research’s latest annual Global Prime Office Occupancy Costs report.
With the strength of a very active downtown office leasing market, Chicago has become more expensive, as it saw a 10.2 percent prime occupancy cost increase over a 12-month period as of Q1 2017, making it the fourth-fastest growing in the US, eleventh fastest in the world, and, placing it 48th on the top 50 list in the world for overall costs.
In March, CBRE noted in its Global Prime Office Rents survey that prime net rents in Chicago’s top office properties, a subset that comprises approximately 14 million square feet, rose 19.9 percent from 2015 to 2016.
This latest survey once again demonstrates strong price growth in the Chicago market by tracking prime office occupancy costs for the same properties—which reflect prime net rents, plus local taxes and service charges—for the 12-month period of Q1 2016-Q12017.
“The downtown market has been very active the last few years,” said Sara Spicklemire, senior vice president with CBRE. “Demand is still very healthy for high-quality space and we continue to see positive absorption. As long as a flight-to-quality and inbound migration to the urban core continues, I don’t see this trend reversing.
Hong Kong (Central) and London’s West End remained the two most expensive office locations in the world. Hong Kong’s (Central) overall prime occupancy costs of US$303 per sq. ft. per year topped the “most expensive” list, followed by London’s West End (US$214 per sq. ft.), New York (Midtown) (US$203 per sq. ft.), Hong Kong (West Kowloon) (US$190 per sq. ft.) and Beijing (Central Business District (CBD)) (US$183 per sq. ft.).
“The global top-10 list reflects the ongoing strength of global gateway cities in attracting and maintaining a successful occupier base,” said Richard Barkham, global chief economist, CBRE.
Global prime office occupancy costs rose 1.9 percent year-over-year, with the Americas up 3.6 percent, EMEA up 0.8 percent and Asia Pacific up 1.2 percent.
Durban (South Africa) had the highest increase in occupancy cost overall, though Stockholm (Sweden) registered some of the fastest growth in Europe, along with Palma de Mallorca (Spain), Belfast (U.K.) and Amsterdam (Netherlands). In Asia Pacific, Shanghai (Puxi) in China had the highest growth in occupancy cost, followed by Guangzhou, Bangalore and Shanghai (Pudong). Buenos Aires showed the biggest increase in the Americas overall, while suburban Denver, suburban Houston and New York Midtown South saw the largest occupancy-cost increases in the U.S.
CBRE tracks occupancy costs for prime office space in 121 markets around the globe. Of the top 50 “most expensive” markets, 21 were in Asia Pacific, 16 were in EMEA and 13 were in the Americas.
To read the entire report, click here.