Outlook Stable for 2009 U.S. Office Occupancy Costs
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06.07.2009 16:35:05
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| D. Clayton |
Declining rents and rising vacancy are the bane of many landlords in
the United States these days, but by another measure–total occupancy
costs–prospects for 2009 look fairly positive compared to the overall
global outlook. In 61 percent of markets in the United States and
Canada, Class A occupancy costs are expected to remain stable, according
to a study released last week by DTZ. By contrast, 78 percent of the
114 global markets surveyed by DTZ are likely to sustain a significant
drop in occupancy expenses this year. Specifically, Class A office
occupancy costs will decline in every major central business district in
Europe and South America. Three quarters of major Asian markets also
expect costs to slide this year; only 24 percent of those cities are
expected to maintain stable occupancy costs. The Middle East and Africa
offer some better news for landlords. That region is expected to
register higher occupancy expenses in 30 percent of its central business
districts–the most of any region surveyed by DTZ. Global economic
tumult also shuffled the positions of the handful of office markets at
the top. Central Tokyo vaulted to first place, displacing London’s West
End, which slipped to fifth place in 2008. Seven out of the 10 most
expensive office markets worldwide are repeaters from last year,
including Paris, Hong Kong, Midtown Manhattan, Madrid and Singapore.
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new entrants to the top 10 are Dubai, Abu Dhabi and Moscow. They
replaced the city of London, Frankfurt and Mumbai. DTZ developed the
ranking of 114 global markets by determining the average cost of Class A
office space that is functional to the tenant, including both work
stations and meeting rooms and ancillary space like lobbies. Costs
include rent and other items that may be paid by the tenant, such as
maintenance and property taxes. Despite devastating blows to the
financial services industry, occupancy costs in Midtown Manhattan
increased a U.S.-leading 6 percent in 2008, ending the year at $18,450
per work station. Boston’s $15,640 per station landed it in second
place, followed by Washington, D.C., at $15,130 per station.