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London remains world’s most expensive market for office real estate

Strong demand and a reduction in available space in London's West End drive up premium lease prices by 5% I  Hong Kong ranked second for the second year  I  Leases increase by an average of 3% worldwide I  Moderate overall increase in EMEA  I  South Africa records highest lease price increase at 30% I  Subdued development of premium leases in the Americas I  Leases increase in Downtown NY and Boston I  Asia-Pacific area remains stable

For the second year in succession, the world's highest lease prices for office space were recorded in London's West End. According to the global market analysis Office Space Across the World 2014 published today by the international real estate consultancy Cushman & Wakefield (C&W), Hong Kong has once again been relegated to second place.

In 2013, a combination of strong demand and a severe lack of space in the premium segment resulted in a lease price increase of 5% in London's West End. Due to the largely unchanged top-level lease price in Hong Kong's central business district (CBD), the price gap between the two office markets has widened further over the last year. In its annual study, Cushman & Wakefield analyses lease developments in the world's key economic centers, with a focus on gross lease prices. “Thanks to a continued increase in its global image, London is and remains attractive to international companies. Although lease prices in the West End are already the highest in the London market area, they are under continued upward pressure due to the constant high demand from all sectors of the economy. We therefore expect a further, discernible increase in peak lease prices in this location in 2014,” explained Digby Flower, Cushman & Wakefield's Chief Executive and Head of London Markets.

Global increase of 3% in premium lease prices

For the third year in succession, a moderate lease price increase of 3% was registered for Europe, Asia and North America. However, some markets were much more active. In Africa and the Middle East, for example, increases of up to 10% were recorded for office space in particular. Moscow's CBD moved up from sixth place last year to third in 2014. By contrast, peak leases in the Asia-Pacific region are largely stable, including in Beijing and Tokyo. Connaught Place in New Delhi fell from fourth to eighth place, due largely to the increase in the value of the US dollar and euro compared to the Indian rupee in 2013. As the rankings are calculated in US dollars or Euros, this resulted in a change in position for New Delhi in the global lease comparison.

The most expensive office locations worldwide (by country)

Rank in

Rank in




Peak gross lease (euro/m²/month)





West End




Hong Kong

Hong Kong



















CBD (city center)





New York

Midtown (Madison/5th Av.)





Rio de Janeiro

Zona Sul





New Delhi

Connaught Place














Source: Cushman & Wakefield 2014

Moderate increase overall in EMEA

The lack of high-quality office space in locations such as London and Frankfurt is characteristic of many European markets. Driven by the market situation and an increase in demand for space, premium lease prices came under upward pressure at the end of 2013. This lease price development was, however, recorded only in individual markets. Overall, the peak lease prices in this region increased only moderately. An increase of 3% was recorded across the entire EMEA area. Average lease prices have therefore increased to an extent not seen since the market slump in 2008.

In Germany, Frankfurt remains the most expensive office location at 37.00 euro/m²/month. Vienna holds first place in Austria with 25.00 euro/m²/month and Geneva is Switzerland's most expense location at 54.00 euro/m²/month.

The most expensive office locations in Germany, Austria and Switzerland


Peak gross lease























Source: Cushman & Wakefield 2014

South Africa records largest lease price increase of 30%

The most significant increase in lease prices in the EMEA region of 14% was recorded in the Middle East and Africa. The economic climate has improved in both Qatar and the United Arab Emirates over recent years. This has resulted in increasing activity in the office market and a growth in the peak lease prices of 10% and 5% respectively. The largest lease price increase in the EMEA region in 2013 was recorded in South Africa, which experienced a 30% increase in peak leases. Over the past year, the market in South Africa has registered a significant increase in large-volume lease contracts coupled with a particularly active labour market.

James Young, Cushman & Wakefield's Head of EMEA Offices has the following forecast: “We assume that the general lack of high-quality office space will incentivise many lessees to make decisions about relocating earlier rather than later. Many companies will endeavour to secure the premium spaces still available on the market at attractive conditions. Considering that the volume of completed new developments will not rise significantly by the end of 2014, we expect top-level leases to remain subject to upward pressure for the time being.”

Subdued development of peak leases in the Americas

After recording two-figure growth in 2012, developments in the peak lease price in the Americas were significantly more subdued at just 1%. In South America, only very moderate lease price increases were recorded in 2013, which is attributable to sluggish economic growth in the key markets of Brazil and Argentina. Ongoing economic uncertainly in both markets over the previous year resulted in a softening in demand for office space and a fall in peak lease prices in many locations.

The growth in demand recorded in Ecuador and Columbia was unable to offset the general fall in lease prices in the two major markets. Based on forecasts by Cushman and Wakefield, the South American market is again unlikely to have an easy year in 2014. The economic uncertainty is expected to remain and exert a negative influence on the business climate in many markets. The expected economic growth in North America is, however, expected to bring about a gradual increase in stability in the region.

Increased lease prices in Downtown NY and Boston

The level of demand in the USA improved in 2013 and is primarily attributable to the unexpectedly rapid economic recovery. The improving business climate contributed to strong lease activities in the USA. However, the increases in lease prices differed greatly across the county, with Downtown New York and Boston recording above-average increases for 2013. Rising lease price levels are also predicted for the USA in 2014. Ron Lo Russo, C&W President New York Tri-State Region explains: “New York Midtown (Madison/5th Avenue) has reclaimed its position as America's most expensive office market. We have observed high demand for office space from companies in a range of sectors, resulting in a corresponding increase in peak lease prices.”

Stable Asia-Pacific region

Top lease prices remained largely stable in the Asia-Pacific region over the past year, with only moderate increases recorded. An increase of 2% was registered for the region as a whole. Although the economic situation was subject some uncertainties at the start of 2013, the key markets in China and Japan gained significant renewed impetus during the course of the year. The region is well represented in the rankings of the world's most expensive office locations. Hong Kong features in second place, with Beijing in fourth and Tokyo in fifth. The outlook for 2014 envisages a similar development to the previous year, with subdued but stable demand. As a result, the lease price level is expected to remain largely unchanged. Incentive packages, such as lease-free periods, are, however, likely to reduce significantly in scope.

2014 is expected to see an upturn in the economy and an associated increase in demand for office space in the Asia-Pacific region. Since the key markets in China and Japan will again be the engines for economic growth in this region, the demand for office space is expected to be greatest in these locations.

“We have a positive outlook for 2014,” says Martin Drummer, Head of Office Agency at Cushman & Wakefield in Germany. “As a result of the continued economic momentum, we expect the demand for office space and, thus, the lease volumes to increase in Germany's key locations. We do, however, expect the peak lease prices in most markets to remain stable. Due to the increase in building completion figures, we forecast a continued rise in top lease prices only for a few selected locations over the coming months.”

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