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Office Leasing Tips , Office Relocation , Office Rental , Office Space , Office Space Negotiations , Tenant Representation

The Worlds Most Expensive Markets for Office Space for Lease

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Office space for rent costs worldwideLOS ANGELES, May 05, 2010 (BUSINESS WIRE) -- London's West End remains the world's most expensive office market, according to CB Richard Ellis Group, Inc. (CBRE) Global Research and Consulting's semi-annual Global Office Rents survey. Hong Kong's Central Business District (CBD) has risen to second place pushing Tokyo's Inner Central to third place. Mumbai is now in fourth position on the list while Moscow remains in fifth in the CBRE rankings, which tracks occupancy costs for prime office space in 176 cities around the globe.

Office occupancy costs measured in U.S. dollars are affected by changes in the dollar's value versus the respective local currency. Hence, office occupancy costs when converted into U.S. dollars are driven by both the local market dynamics of supply and demand, as well as currency changes.

"We have found that currency fluctuations play a big role with regard to where markets rank in the top 10 for office costs," said Dr. Raymond Torto, CBRE's Global Chief Economist. "However, the 'most expensive club' still includes the usual names -- London, Hong Kong and Tokyo."

The report also found that on a year-over-year basis, global occupancy costs are searching for a bottom, with the markets monitored revealing a collective drop of -4.6% worldwide over the 12-month period ending March 31, 2010. Larger markets experienced a slightly greater decline of -6.4%. The majority of markets (133) experienced a decline, with 33 of these markets registering double-digit percentage-point drops in office occupancy costs. 53 markets experienced annual increases in occupancy costs, generally smaller markets affected by quality shifts in key market assets...

... North America is led by Midtown New York, which posted an office occupancy cost of US$64.51 per sq. ft. While office occupancy costs in Midtown New York are high for North America, that market ranked just 26th globally.

North America saw a below-average decline of -3.3% (year-over-year), making the region the third weakest with falling occupancy costs in 51 out of 77 markets. The largest declines were in Calgary CBD (-24.9) and New York Downtown (-19%).

Top Ten Most Expensive Markets
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(In US$ per SF per annum)              US$/SF/annum
  1.) London West End, United Kingdom     182.94
  2.) Hong Kong (Central CBD)             153.20
  3.) Tokyo, (Inner Central), Japan       143.99
  4.) Mumbai, India                       125.76
  5.) Moscow, Russian Federation          125.10
  6.) Tokyo (Outer Central), Japan        118.41
  7.) Paris Ile-de-France, France         113.23
  8.) London City, United Kingdom         110.07
  9.) Dubai, United Arab Emirates         108.92
  10.) Sao Paulo, Brazil                  100.00

More...

Bloggers note: It is interesting to see that the major US office space leasing markets are no where close to the top ten in office space rent costs. Midtown Manhattan is only just over 1/3 of the cost of number one London office space rental rates. The other interesting location in the top ten is Mumbai, India, still nearly double the cost of Midtown Manhattan.

 

London Office Space , Manhattan Office Space , New York Office Space , Office Rental , Office Space , UK Office Space

Does Corporate America Have Too Much Office Space?

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Nasdaq 4/30/10 - Corporate America has 25-50% more space than it actually needs, particularly as tenants move toward more open floor plans, more staff work remotely and companies reduce costs by cutting the amount of space allocated per person. That's the view of Howard Ecker , president of Chicago-based tenant representation firm Howard Ecker & Associates . "Companies have gone from offices to cubicles and now they are going to benching," he said.

Space per person has been in the news lately, with Goldman Sachs reducing its space per person from 228 to 178 square feet and famously putting a number of less-senior executives in internal offices without windows when it moved to its new headquarters building in New York. But Goldman isn't the only one. Over the years, law firms have gone from 750 square feet per lawyer to 500. "They are now going down below that," Ecker said. Advertizing agencies once had 250 square feet per person and now have less than 100, he added.

Bob Stella , president of New York-based tenant representation firm Cresa Partners , said more companies have staff that telecommute or use hoteling, where more than one staffer uses the same workspace. "All companies are looking at ways to be more efficient. It's possible to create a great working environment and do it with less space," he added. "You can virtually be working on your laptop from home and perform a lot of the same tasks."

Although the office market isn't there yet, Ecker believes that changing demographics will have the biggest impact on office space needs and cited the emergence of the Echo Boomers, or the Millenials, who are entering the workforce. "Four percent of the workplace is 65 and older and 50% is 45 and under. As they disappear and younger people start to make decisions, the complexion of the office environment will change," he said. "The younger the decision maker, the less space they will take."

In an extreme case, the need for less space could ultimately stamp out new office development, Ecker said. "If we have 25-50% more space than we need, why build another office building? A lot of people say they have to be in new buildings because they are more efficient. But new buildings aren't inherently more efficient," he said. Finally, using less space is also a much greener option. "Green is a really big issue today. The U.S. government can't lease space in a building that isn't LEED certified and they are leading the charge into efficiency," he said. "The greenest thing that can be done is to use less space."

Source: NASDAQ.com

Green Office , Office Rental , Office Space , Office Space Design

Facebook generation will kill traditional offices, says Microsoft

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Study suggests home working and hot-desking will become the norm

The social-networking generation will rely on mobile technology, remote working and 'pop up' offices to get their jobs done, according to a new study backed by public sector think tanks and the Institute of Directors.

The focus of corporate IT departments will shift from supporting dozens of workers in a single office space to facilitating home-based and remote working, and ensuring that staff in temporary, shared offices can get the job done.

"Companies will be a bit more aggressive with how much office space they need," said David Coplin, national technology officer at Microsoft, which contributed to the report.

"The savings in the short term will be around office space. At best 55 per cent of office space is used at any one time, leaving 45 per cent unused," he told Computer Weekly. "That is 45 per cent of your office costs."

The study suggests the companies will benefit from allowing staff to use online collaboration tools and social networks to carry out their work. Knowledge-sharing and collaboration will be made easier by the knew generation of cloud-based computing services and communications networks.

"There is a message here for organisations that block tools like Twitter at the firewall," said Coplin. "You can't do that any more because you are restricting people's activity. Be confident in your security and let go a bit of your control.

"We have talked for a while about the death of the desk phone. Now we are talking about the death of the desk. Its not just about working from home. There are compelling reasons for working from a variety of locations."

Source: Telegraph

Executive Suites , Flexible Workspace , Home Office , Office Rental , Office Space , Virtual Office Space

Commercial Office Condos - A Primer

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In our office space Blog we have discussed a great deal in the past about how troubling of a time it is for the Commercial Real Estate market thanks to overly abundant unemployment and the recession.  With every challenge there is usually an opportunity.  In this case, a down markets is a great time to buy commercial real estate.  The old adage of buy low and sell high can be applied to this time period. Of course, it is always scary to get into an investment in a down market, but if you can do it now, you will undoubtable be near the bottom of the market with no where to go but up.

One of the best ways to get into commercial real estate is to buy property that your company can use. One of those ways is to buy a commercial condo. The SBA may even be able to help too with a loan guarantee that would allow you to only put 10% down. A great use of leverage.

Here is a primer from CommercialCondos.com to get you started in understanding the  concept.

"Many people understand what a residential condominium is because the concept has been around for generations. In order to understand commercial  condos (also called "non-residential" condos), we can apply many of the residential guidelines, but with the added benefit of potentially increasing profits for your business.

Following is a simple list of frequently-asked questions that will give you a quick and thorough education about commercial condos.

As a business owner who currently leases my workspace, how would I benefit from buying that space?

The most obvious benefit is that you'll own the property rather than rent it, so over time it will gain equity and become a valuable long-term asset. If you leased your 1000 square-foot work space for $30 per square foot for 10 years, you would spend $300,000 (excluding any annual increases) during that time, but all that equity would go to your landlord instead of you. If you'd purchased the space, each year you would be paying yourself and increasing your equity in the property. You could also have multiple tax benefits that you'd not be able to take as a tenant, such as mortgage interest, property tax deductions and deductions for repairs and depreciation. As an owner rather than a tenant, you'll have complete autonomy and freedom to create the exact space you need for your work. You can redesign and remodel to your heart's content.

What are some of the less obvious benefits?

If you're moving into a new location, a lease option (leasing now with an option to buy later) can lock in the purchase at today's price. And if you purchase more space than you need, you can rent out the remainder. Those rental units will pay for themselves while building equity for you.

How do I purchase a commercial condo?

Many business owners don't realize that while commercial banks are hesitant to make loans, the Small Business Administration (SBA) is actively offering up to 90% financing to established businesses for the purchase of office, industrial and retail space. There are many financing options available, but the financing can be complicated because the lender won't necessarily understand what type of property it's dealing with. Is it residential? Commercial? Retail? What kind of loan is it? That's why we suggest that you work with a trusted banker or broker who can bring in a team of experts (accountants, lawyers, architects, as needed) to help you find the best loan and the best property.

Will I have to pay property taxes?

Yes, because you are the owner of a piece of property. But like a home loan, the property taxes can be rolled into your monthly loan payment.

Some residential condo complexes have homeowners associations and dues to pay. Is this true with commercial condos?

Yes, there will be an HOA (homeowners association), and there will be monthly dues. But these dues pay for property maintenance, landscaping, insurance, professional management, and more. If you owned a house, you would also be paying for these things. One advantage of an HOA is that it guarantees that these maintenance issues will be addressed and that the property will be well cared for.

How are the common areas like parking lots, lobbies and walkways maintained?

Property maintenance will operate the same way it did when you were a renter. The developer, or owner of the property, will turn the management responsibilities over to the HOA and the board of directors (which is usually made up of individual owners like yourself). Usually a property management firm will be hired and paid from the HOA funds.

What does the board of directors do, and how involved will I need to be?

The board makes day-to-day decisions about caring for the property. For example, the parking lot may need to be re-paved, or the sprinkler system may need to be upgraded. The board prioritizes these various needs, seeks bids from vendors and makes sure the work is completed. As an owner, you may choose to serve on the board or not. It's not required."

If you are interested in finding out more, request assistance finding commercial real estate for sale from our top local buyer representatives.

Also check out our lease vs buy and financing alternatives articles.

 

Buying Office Space , Commercial Real Estate , Investment Real Estate , Office Building Sales , Office Space Negotiations , SBA Loan