Renting an office in Los Angeles’ desirable Century City market is expensive by local standards but a pittance compared with other big cities in the world.
Los Angeles ranked only 32nd on a semiannual list of international office rents compiled by real estate brokerage CBRE Group Inc. No American city was even in the top 10, which was led by Hong Kong, London and Tokyo.
Rent in densely developed Hong Kong averages $246 per square foot per year, more than three times as much as Century City’s $77. The most expensive U.S. market was New York’s Midtown Manhattan, which ranked 16th at $114.
Rents increased 2.1% worldwide over the year ending Sept. 30 despite economic head winds, said Raymond Torto, CBRE’s chief economist. Leading with a 5.2% increase were North America and South America -- where the Brazilian cities of Sao Paulo and Rio de Janeiro are among the most expensive in the world for office tenants.
Office occupancy costs increased in 74 markets, decreased in 37 markets and had no change in 22 markets.
“The global office market recovery cooled over the past year, hampered by the ongoing European debt crisis, a deceleration of growth in emerging markets and ubiquitous uncertainty created by the ‘fiscal cliff’ in the U.S.,” Torto said. “However, tight market conditions, strong demand for high-quality space and low levels of new construction continue to drive up occupancy costs in many prime office markets across the globe.”<
The 10 most expensive markets were central Hong Kong, London’s West End, Tokyo, central Beijing, New Delhi, Beijing Financial Street, Hong Kong’s West Kowloon Cultural District, Moscow, London and Sao Paulo
Downtown San Francisco experienced the largest year-over-year increase at 34% to $90 per square foot of the 133 markets tracked by CBRE. Substantial rent increases also occurred in San Francisco’s Peninsula market including Silicon Valley; Seattle; Calgary, Canada; Vancouver, Canada; Denver and Houston.