London’s office high-rise rents soar

Dubai: Businesses looking for space in an office address will have to shell out more for one in a London skyscraper, where rents are growing faster than in any other city in the second-half of 2015. London’s office high-rises were up by 9.68 per cent in the period to $126 a square foot, according to an update by Knight Frank, the property services consultancy.

For organisations in Dubai, there was better news with rents remaining unchanged for an average of $43.5 a square foot.

But the mantle of the costliest office locations in high-rises lies with Hong Kong, at $263.25, up by a shade over 3 per cent in the second-half of last year. Manhattan and Tokyo addresses were placed second and third, with $155 and $128.25 a square foot respectively.

“There has been much debate around the future of London’s skyline, but the rental performance of the Capital’s (London) skyscrapers points to the fact there is huge demand for space in landmark, tall buildings and we expect the upward pressure on rents to continue,” said Will Beardmore-Gray, Head of Knight Frank’s Tenant Rep and Agency Business. (Knight Frank bases its findings on rents at office high-rises of 30 storeys and more.

“For the second time in 12 months, London is the fastest growing office tower market in the world due to its diversity of occupier demand and constrained supply,” said Ally McDade, Associate, Knight Frank Research team.

“In the US, the rapid expansion of the tech sector is underpinning rental growth for towers in cities like San Francisco and Boston. Interestingly, Mumbai’s emergence as a top performer has benefited from growth in tech, as it surpassed financial and business services as the top occupier of office space in the second half of 2015.”

City

Prime Rent (USD/sq ft/yr)

Six months growth*

RANK CITY Rent per square foot Percentage of age (between Q2-15-Q4-15)

1 Hong Kong $263.25 3.03%

2 New York (Manhattan) $155.00 1.10%

3 Tokyo $128.75 1.31%

4 London $126 9.68%

5 San Francisco $110 4.76%

6 Singapore $84.75 -4.76%

7 Sydney $83.75 1.39%

8 Boston $77.00 2.67%