Top occupier deals grow or maintain office space
Gross prime office rents in major cities around the world rose by 3% year-on-year in the first half of 2024, as 94% of top occupier deals saw companies expanding or renewing for the same amount of space.
London’s West End remained the most sought-after location of the 35 markets analysed in Savills’ latest Prime Office Costs report.
Bifurcation was especially intense in North America, with the 5-10% most expensive grade-A space averaging 62.5% higher rents than the rest of grade-A. The same bracket worldwide and across EMEA averaged 31.4% and 17.4% higher rents respectively.
Gross prime office rents in major cities around the world rose by 3% year-on-year in the first half of 2024, as 94% of top occupier deals saw companies expanding or renewing for the same amount of space.
London’s West End remained the most sought-after location of the 35 markets analysed in Savills’ latest Prime Office Costs report.
Bifurcation was especially intense in North America, with the 5-10% most expensive grade-A space averaging 62.5% higher rents than the rest of grade-A. The same bracket worldwide and across EMEA averaged 31.4% and 17.4% higher rents respectively.
The report attributed the difference to land constraints within EMEA, which result in higher demand across grade-A office markets, whereas North American demand focused on the most expensive spaces despite high overall grade-A availability.
Regional averages also masked larger variations within regions. Average premiums for prime space across APAC stood at 33.7%, but just 13.5% in Sydney, whereas in Shenzhen and Beijing premiums were in excess of 70%.
Tech remained the most active industry for lettings globally, responsible for 19% of H1 deals and the largest number of new set-ups, expansion and relocation deals.
Rick Schuham, chief executive of global occupier services at Savills, said the results showed the continuation of the flight to quality: “Many businesses continue to invest and, in many cases, expand their office space, core to their business operations, with an emphasis on quality, in spite of rising costs and broader economic uncertainty. That said, simple renewals are up over our last biannual report, from 16% in H2 2023 to 24% H1 2024, which may reflect concerns about higher borrowing and fit-out costs, or simply the lack of high-quality uber-prime options in some markets.”
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