The Top 10 Most Expensive Office Markets In The World
Office real estate costs around the globe are on the rise and companies are feeling the squeeze in both budget and space.
Annual costs per workstation in prime office space has increased an estimated 1.5% globally over the last year, driven primarily by growth in the Americas. New York and Silicon Valley both show increases of 6% from the year prior.
These are the top 10 most expensive office markets around the world, according to a Cushman & Wakefield survey conducted across 215 office markets in 58 countries around the world.
No. 10 Paris
Occupancy Costs Per Workstation (Per Annum): $11,755
Office costs in Paris fell to $11,755 this year, but still came in as the 10th most expensive market in the world. Spaces were slightly larger than some of the other markets in the top 10 list. Paris offices provided an average 12 square meters per person. The French economy and office sector saw improvements in the third quarter as business creation rose and bankruptcy filings fell. These factors have contributed to a continued strong office market, which is expected to carry through to 2018.
No. 9 Sydney
Occupancy Costs Per Workstation (Per Annum): $11,997
Sydney experienced some declines in gross effective rental growth throughout the second quarter, but bounced back quickly during the third quarter. While occupancy costs remain slightly above those of Paris, density is right on par at 12 square meters per person.
No. 8 Geneva
Occupancy Costs Per Workstation (Per Annum): $13,424
Though Geneva is the eighth most expensive office market in the world for occupiers, costs have fallen from the year prior. Experts attribute this in part to the strength of the Swiss franc in relation to the euro, which has caused a decline in Swiss markets such as Geneva and Zurich, CBRE reports.
No. 7 Silicon Valley
Occupancy Costs Per Workstation (Per Annum): $15,004
Silicon Valley came behind New York on Cushman & Wakefield's list, thanks to its booming tech market. The region experienced a 6% increase in occupancy costs year-over-year and came in at an annual $15,004 per workstation. As for density, the area offers an average 11.5 square meters per person.
No. 6 New York City
Occupancy Costs Per Workstation (Per Annum): $15,931
While New York City is one of the most expensive real estate markets in the U.S., it is the sixth most expensive market in terms of occupancy costs in the world. The city is also one of the most dense of the 10 office markets ranked by Cushman & Wakefield. It averages 10.4 square meters per workstation. This trend has been on the rise the past five years and can be attributed in part to new supply, such as Hudson Yards' $20B development, which will include 18M SF of commercial and residential space.
No. 5 San Francisco
Occupancy Costs Per Workstation (Per Annum): $16,204
Like Silicon Valley, San Francisco's burgeoning tech scene has driven office prices sky-high, making the city the fifth most expensive office market in the world. But while space is expensive in San Francisco, it is not quite as dense as Silicon Valley or New York. Most offices average 12.3 square meters per person.
No. 4 Fairfield County, Connecticut
Occupancy Costs Per Workstation (Per Annum): $17,414
Fairfield County may not be a large metro, but the city is ripe with financial organizations such as hedge funds and several corporate headquarters, including Xerox in Norwalk, Pitney Bowes in Stamford and Aetna in Hartford. This has led to a rise in occupancy costs, despite the drop in the city's talent pool. The offices do offer a little more space than others on the list with approximately 12.8 square meters per person.
No. 3 Tokyo
Occupancy Costs Per Workstation (Per Annum): $18,111
Tokyo was the second Asia-Pacific market to make the top 10 list and ranked No. 3 in Cushman & Wakefield's overall list. Occupancy costs average a booming $18,111 per workstation annually, while density averages 11.9 square meters per person.
No. 2 London West End
Occupancy Costs Per Workstation (Per Annum): $22,664
Occupancy costs in London fell by 19% to $22,664, which CBRE attributes to a decline in demand, particularly from financial occupiers that have become less inclined to pay the high rents in London’s premier market. When it comes to density, space is on par with New York. London is also one of the most dense markets with an average of 10 square meters per person in prime office space.
No.1 Hong Kong
Occupancy Costs Per Workstation (Per Annum): $27,432
Hong Kong was by far the most expensive office market in the world per workstation per annum. Average occupancy costs were up 5.5% from the year prior. In terms of office density, Hong Kong averages 11 square meters per person. The cost of accommodating 100 employees at a Hong Kong firm is equal to accommodating 300 employees in a Toronto-based office, 500 in Madrid and 900 in Mumbai. Limited availability and strong demand from Chinese corporations are exacerbating rising costs, though this trend could reverse in the coming months as high office prices force corporations to move into lower-cost areas.