Knight Frank today releases the Skyscraper 2015 Report which looks at the prime office rents of 18 markets across the globe.
Highlights:
• Hong Kong still boasts the world’s highest skyscraper office rents at USD250.50 per sq ft. Hong Kong’s large lead in rents reflects a low vacancy rate and constrained CBD area.
• However, New York is closing fast. While Asia may be building apace, economic recovery in the US is buoying demand for towers from investors and tenants in the big North American cities.
• Skyscraper prime office rents in New York have dramatically increased by 20% to hit USD150.00 per sq ft since July 2014, outperforming Hong Kong which increased by only 11.3%.
• In 2009, there were a total of 19 skyscrapers in the world with heights of over 1,000 feet. Today, there are 79 of them – 40% of which are in China; 28% of which are in the UAE.
• New York rental values have boomed as skyscraper development has increased, with towers proving popular workplaces for the expanding digital and creative firms in the city, as well as financial and professional firms.
James Roberts, Chief Economist at Knight Frank, says, “We are now seeing the western cities erode the lead of big Asian centres in tower office rents. For premium floors with views, rents are rising in Hong Kong, but they are increasing much faster in New York. Similarly, London is closing the gap on Tokyo.
“Economic growth prospects for this year favour locations like New York and London, so I see these cities stepping up competition on the Asian centres. Many people like to say that the balance in the global economy is shifting from west to east, but certainly skyscraper rents provide another indicator that shows this is not entirely the case.”
In 2009, there were a total of 19 skyscrapers in the world with heights of over 1,000 feet. Today, there are 79 of them – 40% of which are in China; 28% of which are in the UAE.
Skyscrapers are a rising tide in the modern global city. London has added 23 new skyscrapers (a building over 350 feet high) since the turn of the millennium, compared to 17 in the preceding forty years. While New York added four new towers in 2014 alone, including the iconic One World Trade Center. This sounds impressive until one considers that Dubai has built nearly 190 skyscrapers since 2000, and Shanghai over 90.
Nicholas Holt, Head of Research for Asia Pacific at Knight Frank, highlights, “The expansion upwards in the major Chinese cities has been a remarkable phenomenon over the past decade. The fact that 40% of skyscrapers in the world with heights over 1,000 feet are in China underlines the growing importance of the country’s economy on the world stage.”
David Ji, Director, Head of Research & Consultancy, Greater China at Knight Frank, says, “Hong Kong recorded the third fastest growth rate in skyscraper rents globally in 2014. Grade-A office rents in the core areas of Hong Kong are expected to rise a further 5% in 2015, due to limited supply. Grade-A office rents in Beijing, Shanghai and Guangzhou, however, are likely to fall, as abundant new supply will come on stream this year. This is reflected in the rankings of these first tier Chinese cities, with Shanghai ranking only 10th globally, Beijing falling out of the global top 10."