New report ranks London’s West End as second most expensive office market in the world

London’s West End is the second most expensive office market in the world, falling just behind Hong Kong Central, according to CBRE’s annual Global Prime Office Occupancy Costs report.

Nine of the top ten most expensive locations are the same as last year, but London (City) returned with overall prime occupancy costs at $145 per sq.ft, displacing Shanghai (Pudong) for the 10th spot.

London’s West End reached prime occupancy costs of $235 per sq.ft.

Kevin McCauley, head of London research at CBRE, said: “Helped by sterling’s appreciation against the U.S. dollar, the return of London (City) to the ranking reflects robust and diversified tenant demand and relatively limited new supply.

“London’s attraction to both UK and international businesses means that it will continue to command some of the highest office costs in the world.”

Global prime office occupancy costs, which reflect rent, plus local taxes and service charges for the highest-quality, “prime” office properties, also rose by 2.4% year-over-year, with the Americas up 3.2%, EMEA up 2t and Asia Pacific up 1.7%.

Richard Barkham, global chief economist at CBRE, commented: “For the first time in this cycle, prime office occupancy cost growth was consistent across all regions. Global economic growth has stimulated robust leasing activity, particularly in EMEA and APAC.

“While occupancy cost growth in the Americas slowed slightly compared to a year earlier, it remains the region with the overall largest increase in costs. We expect global office occupancy costs to increase by approximately 2% in the year ahead.”