Amid fears of a long global economic downturn, office occupancy costs are expected to decline globally in 2009, led
by further contraction in occupier demand, said DTZ in its latest research on global occupancy costs, published today.
Although several of the largest North American business districts at the heart of the financial turmoil will see occupancy costs decline in 2009, many other markets across this region are expected to remain fairly stable. In contrast, prospects of an impending supply glut in some markets and the wider adoption of flexible work practices leading to reduced space consumption will help drive occupancy costs down across Europe and Asia Pacific, says DTZ in its report.
districts surveyed globally expect occupancy costs to fall in 2009. Only 3% of the business districts are optimistic about an upturn in occupancy costs, while the remaining 19% expect occupancy costs to remain stable.
DTZ revealed that 61% of the North American business districts surveyed expect office occupancy costs to be stable, while another 39% are predicted to experience a significant decline in occupancy costs. In the Middle East and Africa, which were among the last to feel the impact of the financial turmoil on their office markets in 2008, 30% of business districts expect some increase in occupancy costs, while the rest expect accommodation costs to fall throughout 2009.
All the European and Latin American business districts surveyed expect occupancy costs to fall. Similar sentiments are reflected in Asia Pacific, where 76% of the markets surveyed expect office occupancy costs to decline, while 24% expect occupancy costs to remain stable over the year.
DTZ’s latest survey also shows that Tokyo (Central 5 wards) has overtaken London (West End) to be the most expensive office location on a cost per workstation basis. London (West End), which had been the most expensive office market on this basis since 2001 when DTZ first compiled such rankings, was ranked fifth.
Only the Middle East and Africa region and Central and Eastern Europe registered positive annual growth in office occupancy costs over the previous year (28% and 11% respectively). All other regions witnessed declines in occupancy costs.
DTZ’s analysis of office occupancy costs is based on the space allocated to each office-based employee across 114 business districts worldwide. As space utilisation standards per workstation differ in each business district due to local practices and culture, a comparison of the office occupancy costs based on the amount of space allocated to each employee gives a better comparison of the total costs of office occupation. The space not only takes into account the direct area used for a desk-station or a cubicle, but also common areas which the tenant/occupier has exclusive use over.
In terms of rents and other outgoings per square foot, Moscow, Hong Kong and London (West End) were the top three most expensive office locations in 2009. However, due to a higher space utilisation standard per workstation, Tokyo (Central 5 wards) was the world’s most expensive office location on a cost per workstation basis. Its space utilisation per workstation was 144 sq ft compared to Moscow (84 sq ft), Hong Kong (118 sq ft) and London (West End) (118 sq ft).
For further information please contact:
Evelina Necula
Head of Marketing Department
E-mail:
[email protected]
2 April 2009
