A recent report into the market for serviced offices globally conducted by CB Richard Ellis (CBRE) indicated a continuing bounce back in commercial property rents worldwide, with much of the power behind it coming from Europe, the Middle East and Africa (EMEA).
Whereas globally the rent index for serviced offices showed a year-on-year rise of 4.3% in the first quarter (Q1), regionally the rent increase varied, mirroring the global economic picture. Rent for offices managed a modest 2.5% growth in the EMEA region, perhaps limited by the downturn in new construction, whereas the Asia Pacific managed an impressive 11.3% rise.
In the Americas the change in rents for serviced offices was negligible. Again, a lack of new office space and new construction is believed to have contributed to these static conditions.
This recovery in rents for serviced offices follows a worldwide recession which has seen 7 consecutive quarters of negative growth from a peak in mid-2008. It has been followed more recently by a global upward trend for the past 4 quarters. This news will no doubt be a relief to commercial landlords everywhere.
The effect of the recession on the market can be seen in the CBRE rent index, which stood at 119 points at its peak and is at 104 today. Although it hasn’t recovered to anything like previous levels there has been improvement in the global market for serviced offices.
Speaking specifically of the growth in EMEA, Richard Holberton, Director of EMEA Research, CBRE, said: “Rates of rental and capital value change in the EMEA region are currently modest. While few markets are now seeing any decline in prime rents, clear evidence of growth is confined to a small number of the stronger cities such as London, Paris, Berlin and Stockholm.”
In contrast to the relatively recent recovery in the serviced office leasing market, the Global Office Capital Value index has undergone a year-long expansion, showing impressive year-on-year growth in Q1 2011 of 12%. Again the turn in fortunes has been Asia Pacific led, with a more muted response from EMEA and a market in the Americas that remains tepid.
