A more stable 2013 for the world’s office market.
Stabilisation seems to be the buzzword in the global office market in 2013. That’s according to Cushman & Wakefield’s latest Global Office Forecast.
The estate agent also predicted Jakarta, São Paulo and San Francisco to be the best performers through 2014, though some markets and regions are also predicted to experience increased – albeit not very noteworthy – activity in the latter part of this year.
According to Glenn Rufrano, president and CEO of Cushman & Wakefield, the global office market is transforming itself, particularly in the more mature markets. ‘Tenants are focused on achieving efficiencies, which in many instances has translated into occupying less space.’
Rufrano added that an increasing flight to quality has been seen, resulting in pockets of growth in top-quality properties and global gateway cities.
The report indicated that most US cities will see limited new construction through 2014, with the bulk of activities taking place in New York, DC, San Francisco and Boston. Cushman & Wakefield predicts a bifurcated recovery in the Americas over the next two years, with the USA and Canada seeing modest growth in 2013 (followed by a more robust growth in 2014), and Mexico and South America enjoying a more solid performance over the same period.
Maria Sicola, head of the Americas Research at Cushman & Wakefield, added that the prime rents in São Paulo will grow by 60% over today’s prices by 2014, as new developments are planned to support activity around the World Cup.
Meanwhile, the European market is in for a slow growth over the next 24 months, though vacancy is expected to decline as construction remains slow.
‘Europe faces a slow re-balancing in its office property market but we can now look forward to a more stable situation rather than a further decline – or at least we can for prime space in major commercial centers,’ said David Hutchings, Partner and Head of Cushman & Wakefield’s European Research Group.
‘A shortage of supply will be the key characteristic driving short-term rental increases, which will frustrate those occupiers looking to expand.’
On the other hand, Asia Pacific’s economic growth is unlikely to slow further. The region’s economic momentum will remain sufficient to strengthen employment and sustain its property markets, with the outsourcing industry continuing to be an important growth segment in 2013.
‘Although rent growth is slowing in Asia, occupiers across the region will continue to pay higher rents when their leases roll over in 2013 and 2014,’ said Sigrid Zialcita, Managing Director of Research for Asia Pacific.
As most tenants rationalise location requirements and enhance space efficiencies, demand gains will be lower compared with 2012. However, occupancies will remain high in such CBD markets as Hyderabad, Brisbane, Manila and Perth, while high availabilities will be seen in markets with robust construction such as Kuala Lumpur, Guangzhou, Pune, New Delhi, Chengdu and Ho Chi Minh City.