Cushman & Wakefield has released its 2015-16 global office forecast, which examines Grade A office market trends, with results looking positive across the board. The report covers Europe, the United States and the Americas, Canada, Asia Pacific, Latin America and South America.
According to Maria T. Sicola, the head of Cushman & Wakefield’s research for the Americas group, “2014 was a stronger year for the office real estate sector, with many markets heading into 2015 on solid footing.” She added that despite some areas suffering from political instability and stalled economic growth; overall the outlook is an improvement on12 months ago.
The European market is somewhat mixed according to the report, but overall the recovery is taking shape – but at different speeds across the continent.
The two leaders in rental growth are Dublin and London. Dublin has only one scheme in development and is expected to see 8.6 per cent annual compound growth over 2014-2016.
The outlook for London is positive, with occupier demand expected to climb, specifically for Grade A space. Sicola said “The outlook is brighter than it has been for a considerable period of time”
“Overall performance is positive across leading indicators including rental growth, supply levels and demand”.
US Cities are the North American “Bright Spots” and with this they are experiencing economic expansion, spreading way beyond the energy and technology sectors.
Sicola said that demand for newly built and refurbished space is on the rise, adding “while rental growth has moderated in some markets, more than 80 per cent of the locations in the study will experience rent growth exceeding inflation”.
The change in workforce has also given the U.S. office market a boost with the fact that “the millennial generation is exerting its influence on where it wants to work”.
She added that cities like Atlanta, Chicago and Dallas are seeing an increase in leasing velocity, matching those of San Francisco, Boston and New York, among others.
Canada’s office market seems to be recovering at a steady rate also. Strong demand in the area of Toronto will see 5.1 million sq ft of new space coming to the market in 2017. In Montreal the Deloitte Tower will rise while cities like Vancouver and Calgary will also get new supply.
Japan and India’s economic growth and stability is the strongest within this area. In Tokyo, office market demand is being driven by strong corporate profits, while India and Singapore dominate with technology based occupiers.
Rental growth is strong in Tokyo and Singapore, while rents in China will grow moderately before stabilising.
Mexico City is the star performer in the Latin American office market largely due to recent legislation opening the country up to increased foreign investment. Although GDP was below expectations last year, growth is predicted over the course of the next several years.
The South American markets are lagging behind, particularly the Argentinian and Brazilian markets. But in Chile, however, the Santiago office market is “ahead of the curve” and is in closer line with other markets which are not expected to recover fully until 2017.
