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Chicago — May 27, 2015 – DTZ, a global leader in commercial real estate services, announced the release of its 18th annual Global Office Thermometer, which measures the cost of office occupancy in 138 cities worldwide on a workstation basis.
On a U.S. dollar basis, the average annual costs of occupying a workstation declined 3.9 percent in 2014, with the Asia Pacific region posting the greatest decline, 8.3 percent, followed by Europe, the Middle East and Africa (EMEA) at 7.8 percent.
Occupancy costs in North America, however, increased 4.8 percent, reflecting the relative strength of the U.S. economy. Similarly, Greater China posted a 2.4 percent increase.
“Broadly, declining occupancy costs reflect the sharp depreciation of local currencies against the U.S. dollar, slower economic growth in Europe, and increased supply in emerging markets,” said Steven Quick, DTZ chief executive, Global Occupier Services.
“Additionally, occupiers are reducing costs by using space more efficiently in many cities. International occupiers will continue to benefit from ebbing cost pressures in several markets. Overall, we expect global occupancy costs to increase just 0.5 percent over the next two years.”
Globally, London’s West End was the most expensive office location, with an average cost per workstation of $29,340, followed by New York ($22,990); Hong Kong ($21,110); Lagos, Nigeria ($19,080); and Zurich ($15,160).
The top 10 most expensive office markets in North America in 2014 were New York, San Francisco ($15,070), Ottawa ($11,360), Calgary ($11,340), Boston ($10,100), San Jose ($10,080), Toronto ($9,210), San Diego ($8,800), Houston ($8,270), and Denver ($7,850).
North American cities with the greatest cost increases were San Francisco (12 percent), San Jose (9 percent), Houston (9 percent), Calgary (8 percent), Minneapolis (7 percent), and Seattle (7 percent).
New York City workstation occupancy costs increased by 6 percent, but the city’s occupiers typically increased space utilization and decreased the amount of space allocated per workstation to offset the impact of rising rents.
The Global Office Thermometer projects occupancy costs in most major U.S. cities to moderate in 2015 and 2016. Workstation costs in Houston and Dallas are expected to decline about 4 percent per year, due in part to slower demand from energy-related occupiers, while occupancy costs in Boston are expected to decline 5 percent. Chicago and Washington, D.C., are slated for increased occupancy costs at 3 percent and 2 percent, respectively.
Access this link to download the Global Office Thermometer.
