CB RICHARD ELLIS RELEASES NEW GLOBAL OFFICE MARKETVIEW
CB Richard Ellis (CBRE) today released its latest Global Office MarketView report (March 2011), focusing on the office property sector’s ongoing recovery from the global financial crisis. According to the report—prepared by CBRE’s Global Consulting and Research—the commercial office recovery is disparate and divergent.
“The decline in demand is over for most markets, but vacancy rates remain elevated and will impede the near-term performance of rental rates,” said Dr. Raymond Torto, CBRE’s Global Chief Economist. “Job growth also has a long path toward improvement in both the U.S. and European markets, albeit not Asia ex Japan, and will continue to slow the recovery of the global office market.”
The following trends are driving the global office market:
Many office markets continue to experience a “flight to quality” by which tenants are taking advantage of low rents for prime office space and many occupants are seizing the opportunity to upgrade or expand their office space into newer, higher-quality space.
Much of the recent office development activity is occurring not in the world’s developed economies, but in emerging markets where strong economic growth persists. In 2010 43 million sq. ft. of newly developed office space introduced into the market was in Asia—46% of the global total. In 2011, CBRE forecasts that nearly 55 million sq. ft. of new office developments will take place in Asia, or 62% of the global total. Another way to note the disparities in new development is to realize that the 2010 office completion rate in Asia/Pacific is 5.3%, the Americas 1.4% and in EMEA 1.5%.
All three regions observed improved net absorption over the course of 2010, and this trend is expected to continue during the next few years. Each year will be better than the last, if the issues of European Sovereign Debt, the price of oil and the US deficit and debt do not disturb economic progress.
The markets that are seeing accelerated improvements in rents, such as New York, Washington, DC, Sydney, London’s West End, Singapore, Paris and Hong Kong are areas that have also experienced strong job and economic recoveries. On the other hand, economies such as Los Angeles, Chicago, Auckland, Mexico City and Madrid, have yet to turn but they are seeing the decline in rents slowing or at bottom.
The CBRE Global Office MarketView also features economic snapshots for each global region, and office market analysis and forecasts, along with specific local office summaries.