Business Trends

Greater Divergence across Global Rent Landscape, by CBRE

File Type: Free Content, Article
Release Date: May 2013
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Trends in global office rents pointed to a growing regional divergence in the first quarter of 2013, according to CBRE. As detailed in the firm’s Global Office Rent Cycle Marketview publication, rents for markets in the Americas continued towards gradual recovery; the majority of EMEA markets paused; and the Asia Pacific markets experienced muted demand against a subdued economic backdrop.

The CBRE research positions office rents by market relative to their unique rent cycle. The Global Cycle tracks 18 key global markets, which broadly fell into two main stages of the cycle in the first quarter of 2013.

The first stage was the market trough. In Q1 2013, rents in Frankfurt, Los Angeles Downtown, Auckland, Singapore, and Washington, D.C., reached or stayed at their bottom levels. Meanwhile, modest growth manifested for Chicago, Los Angeles Century City, and Tokyo. Los Angeles Downtown and Washington, D.C. were still hovering along their bottom levels as they were strained by weak economic recoveries. Tokyo improved positions in Q1 2013 — joining Chicago and Los Angeles Century City in the moderately accelerating growth phase — due to improvements in occupier sentiment brought on by renewed confidence in a potential turnaround for the Japanese economy.

The second group of markets consisted of those near a cyclic high or, perhaps, a plateau. These markets, including London and Paris, were confronted with weak occupier demand. In some cases, such as in London, this prompted landlords to increase leasing incentives to counteract occupier reluctance. Other markets in this same group, including Mexico City and Sao Paulo, saw an influx in new supply, serving to ease pressure on rents.