S’pore Office Rents Among World’s Top 10

Source : TODAY, Thursday, February 14, 2008

Office rents rose an average of 14 per cent worldwide last year as demand grew from banks and brokerages in the United States, the United Kingdom and Asia.

Rents in the 10 most expensive office markets increased 40 per cent last year, Cushman and Wakefield, the world’s largest closely held real estate brokerage, said. Singapore moved into the top 10 for the first time, with occupancy costs hitting an average of about US$130 ($184) per sq ft.

Financial services firms are driving rent increases in cities including London, New York and Hong Kong, where they take as much as 60 per cent of available office space. Landlords are earning more as rising construction costs have limited development, said Ms Maria Sicola, executive managing director for research at Cushman.

“We had strong and steady demand, and we really have had very little new supply in these global markets,” she said.

London remained the most expensive city, with rents in its West End rising 30 per cent and total annual occupancy costs averaging US$311.58 per sq ft.

New York dropped to 10th place but is likely to move up the rankings because office space in the city “is so tight and demand there is strong”, Ms Sicola said.

According to the Cushman and Wakefield report, rents in Singapore for top-tier space rose 78 per cent, allowing it to move up 10 spots to 7th place.

According to statistics from the Urban Redevelopment Authority, office rentals here increased 56.1 per cent last year.

The Cushman and Wakefield report stated that total annual office occupancy cost averaged US$130.48 per sq ft last year, making it even more expensive than New York’s Manhattan district. Rent growth in Singapore was helped by demand from banking and business services and a limited supply of top-tier office space, Cushman said.

PricewaterhouseCoopers leased 441,320 sq ft of office space in London last year, while Standard Chartered added 508,298 sq ft in Singapore. Lehman Brothers Holdings leased 414,575 sq ft in Manhattan, Cushman said.

Ms Sicola said it is too early to know how the collapse of the sub-prime mortgage market and tighter lending standards would affect office demand and rents. Rent growth is likely to drop to between 5 and 10 per cent this year. - Bloomberg