New York City has dropped back into second place among the most expensive office markets in the world after moving ahead of London during the second half of 1984, according to Richard Ellis Inc., Chicago-based real estate investment advisers.
The latest issue of the firm's World Rental Levels reports that total occupation cost (rent plus service charges and taxes) in London has risen to $72 a square foot per year for prime office space, while the total cost for comparable space in New York is nearly $68 a square foot.
Among the 21 major office centers surveyed, Tokyo ranked third in being expensive at $57.50 a square foot, followed in the top 10 by San Francisco ($42.50), Los Angeles ($35), Chicago ($35), Hong Kong ($33), Paris ($31), Singapore ($30) and Sydney, Australia ($25).
"The exchange of places between New York City and London is due to a marginal rise in rents in London as a result of continued economic growth in the United Kingdom and the lower availability of top quality space in prime London locations," said Gerald Parkes, senior vice president of Richard Ellis Inc. in New York.
"By comparison, New York's mid-town office leasing market has softened somewhat in the last six months, partially due to an oversupply of new space and partly due to a general feeling of caution in taking large amounts of space in an uncertain economy."
Hong Kong rents have increased, according to the report. It had been assumed that oversupply, a high rate of development and the general uncertainty of the future of the island would keep rental levels depressed, said Parkes, but since the joint declaration by Britain and China last September, rents have moved up in response to increased confidence and high absorption levels.