Asia Pacific’s office rents mount, vacancy rates edge down

Office rents in Asia Pacific climbed 2.9 per cent in the first halfof 2011with vacancy taking adive by 121 basis points (bps), according the Colliers International Global Office Highlights during the first half of 2011 released recently.

Covering 173 office markets in the world, the report finds Grade A office rents in Hong Kongto be themost expensive worldwide, followed by London – West End. Paris replaced Tokyo as the third mostexpensive Class A office rent in the globe, while London city remained in the 5th spot.

The Asia Pacific office vacancy rate tumbled 121 basis points (bps) to 11.42per cent, while the regionaloffice rent edged up 2.9per centin the first half of 2011.

Hong Kong’s Class A office rent at $2,297.85per sqmper year was the highest in the region as well as the world,while Tokyo ($1,128.06per sqmper year) and Singapore ($935.48.00 per sqmper year)ranked the second andthird most expensive, respectively, in Asia Pacific.

“Although Asia registered rising rent and lowering vacancy in the third quarter of2011, demand for office spaces inthe region showed signs of weakness amidst increasing concerns of the European sovereign debtcrisis and uncertain growth prospect in the United States,” said Simon Lo, executive director ofresearch and advisory, Asia at Colliers International.

Grade A/ Gross Rent (US$ per sqm per year) – Top 5 Cities

City	June 2011	Dec 2010	June 2010
Hong Kong	2,297.85	2,064.19	1,735.70
London– West End	1,615.05	1,430.32	1,393.33
Paris	1,203.44	1,098.39	987.31
Tokyo	1,128.06	1,129.03	1,083.44
London- City	1,114.09	1,072.80	1,012.58

“Individual multi-national corporations areexpected to give a pause of their expansion plan, or even consolidate, while some local enterprises inthe region still have solid occupational demand,”added Lo.

The region remains characterised by high levels of office construction. Construction in 10 cities,including Bangalore, Beijing, Chengdu, Chennai, Delhi, Guangzhou, Ho Chi Minh City, Mumbai,Shanghai and Tokyo, totaled 12.8 million sq meter at midyear. Guangzhou recorded the most officespace under construction worldwide with 2.9 million sq meter office being built.

In Europe, Middle East, Africa (EMEA), seeing more mixed economic conditions, the average office vacancy rate was relativelyhigher at 12per centat mid-year. However, office rents in the region largely held steady.The Class A rentin London West End remained the highest in the region, or the second most expensive worldwide, atmid-year. Meanwhile, office space under construction in the region was down modestly from 15million sqmat the end of 2010 to 14.78 million sqmin mid-2011.

The United States office market has yet to see recovery with many markets still recording little or nogrowth. Office rents continued to languish with those in downtown and suburban markets registeringsmall decreases in the first half of 2011.

Given the sudden stall in job creation and continued highenergy costs, full recovery of the United States office market is expected to surface in mid-2012 at theearliest. By comparison, Canadian markets enjoyed a relatively good half year supported by a robustfirst quarter and a modest job gains in the first half of 2011.

In terms of Class A gross rent, Midtown Manhattan in New York ($7,446.02 per sqmper year)was the most expensive in the region as of June 2011 – VIR

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