Positive Outlook for Global Office Market in 2010: Report Released by Cushman & Wakefield

Cushman & Wakefield, among the world's top real estate consultants, has released its latest edition of report on the Office Space Across the World, providing detailed analysis of prime offi ce property rental performance and occupancy costs across the globe in the twelve months to December 2009.

According to the report, the weakness in the global economy impacted on the occupational market in every corner of the world in 2009. Vacancy rates increased and, coupled with declining occupier demand, rents fell in the majority of markets as the pendulum swung firmly in the occupiers’ favour. Globally offi ce market rents decreased by 10%, the first aggregated global fall recorded since 2003. No market escaped and rents were down in every region; a trend not previously seen.

Asia Pacifi c recorded the steepest decline year on year, with rents falling on average by 16%. Th e overall fall in rents was mainly driven by sharp falls in the key fi nancial markets in the region. Singapore, Hong Kong and Tokyo recorded falls of 45%, 35% and 21% respectively, although Ho Chi Minh City saw the largest
compression in rents with a fall of 53% recorded, as the supply of Grade A space rose sharply.

The report further explains that the varying speed of rental falls coupled with currency fluctuations saw some movement in terms of the relative cost of locating in cities across the world. While the top 3 most expensive locations remained constant, Tokyo was ranked number one in the world and London West End moved into second place, as Hong Kong fell from fi rst to third position.

The report, based on its research, predicts that most of the global economies are expected to see positive GDP growth in 2010 and greater certainty should see improved occupier confidence. This should start to translate into better levels of occupational demand throughout 2010. The scale of the recovery is likely to vary not only from region to region but intra regionally too. The lack of signifi cant construction in most cities, coupled with more limited occupier space rationalisation means that vacancy levels are anticipated to peak in most cities during 2010, with very few characterised as having a signifi cant oversupply.

However, there will be a number of markets where new speculative development completions are still anticipated to be high which will dampen any rental recovery. Read the complete report at Cushman & Wakefield.