According to a report released by real estate firm DTZ, Asia Pacific office rents are expected to show the largest increase in rents from 2013 to 2017. Bengaluru, India, is expected to post the highest annual growth at 8.5 per cent.
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Office rents in Europe are expected to post a wide range of results, with rates in Prague expected to decline by approximately 1 per cent, according to the DTZ report.
In the United States, the office market outlook shows less variety. Expected growth in that country is below the global average, and ranges from 0.8 per cent in Philadelphia to 3.4 per cent in New York.
According to the firm, most companies surveyed indicated they were still hesitant to commit funds to expand to new office space in the first six months of 2013.
Slowing economic growth in China accounted for a modest average rate increase of 0.8 per cent in Asia Pacific in the first half of the year. Decreases of 3 per cent were recorded in Mumbai and Shanghai. Jakarta topped the global growth ranking, with average rents increasing by 9 per cent in the first six months of the year.
The DTZ report stated that despite the worsening sentiment in the Asia Pacific and the slowdown in the Chinese economy, the stabilising market outlook combined with tight supply will put upward pressure on rents across “all markets in the region.”
In Europe, all office markets reported mixed rental performance. In 19 of the 39 regional markets, rents remained unchanged. In 10 of the markets, rents increased and 10 reported decreases in rents. Bucharest was the market that suffered the largest global decline at 8 per cent, according to the report.
Landlords in Rome, Milan, Madrid, and Barcelona have been required to reduce rents in response to adverse economic conditions in Italy and Spain.
Rental rates in the United States increased by 1 per cent in the first half of the year, compared to 0.8 per cent in 2012. San Francisco had the largest regional growth at three per cent. Rents in that country are expected to grow by 1.7 per cent in the next five years, with occupiers in New York facing the highest annual increases at 3.4 per cent.
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