SOURCE: Cushman & Wakefield

Cushman & Wakefield

December 01, 2017 05:18 ET

Hong Kong Is World's Most Expensive Office Location

As Cost-Per-Desk Rises 5.5% Y-o-Y

HONG KONG, CHINA--(Marketwired - Dec 1, 2017) -

  • London drops to second place at US$22,665 per workstation
  • Cost of locating 100 workers in Hong Kong is equivalent to 300 in Toronto, 500 in Madrid or 900 in Mumbai
  • Average annual cost per workstation rose by 1.5% globally in last 12 months
  • Working patterns and rise of technology likely to disrupt future rankings

 Hong Kong has replaced London's West End as the most expensive office market in which to accommodate staff, according to new research from Cushman & Wakefield.

The annual Office Space Across The World report surveys occupancy costs across 215 office markets in 58 countries/regions worldwide. Using proprietary data, it ranks occupancy costs per workstation and workplace densities for newly developed or refurbished office space globally.

Limited availability and strong demand from mainland Chinese corporations have pushed Hong Kong costs up 5.5% to $27,432. Escalating rents are driving a growing number of multinational corporations to decentralize to lower cost areas. As a comparison, for the same cost of accommodating 100 staff in a Hong Kong office, 300 can be accommodated in Toronto, 500 in Madrid, and 900 in Mumbai. 

In contrast, costs in London have fallen 19% since 2016 - largely as a result of currency depreciation -- to an average of $22,665 per workstation per annum. For Asia Pacific markets, apart from Hong Kong, Tokyo maintained its ranking as the third most expensive location globally, while Sydney ranked in the 9thplace.

Top 10 Global Office Locations by cost
(Source: Cushman & Wakefield)
Rank   City (Region)   Workstation cost per annum US$
1   Hong Kong (Asia Pacific)   27,432
2   London West End (EMEA)   22,665
3   Tokyo (Asia Pacific)   18,111
4   Fairfield County (Americas)   17,414
5   San Francisco (Americas)   16,205
6   New York City (Americas)   15,931
7   Silicon Valley (Americas)   15,004
8   Geneva (EMEA)   13,424
9   Sydney (Asia Pacific)   11,997
10   Paris (EMEA)   11,756

At a global level, the average annual cost per workstation rose by 1.5% over the last 12 months. This was driven by the Americas where costs increased by 4.2% and Asia Pacific, where they rose by 3.4%. EMEA posted a fall of 1.3%. Currency fluctuations have produced some of the biggest changes in the report's rankings. For companies looking at their local costs, this factor will exercise them more than property markets over the next year.

Along with rising occupancy costs, workplace density -- the number of workers within a given space -- has also increased at a global level in 2017. Employers, especially in traditional 'power cities' like New York, London, Tokyo and Hong Kong, want to be as efficient as possible in order to accommodate rising workplace populations and get the best value from increased occupancy costs.

John Siu, Managing Director, Hong Kong, Cushman & Wakefield, said, "In the face of global high rents, large corporations and MNCs in Hong Kong are increasingly turning to space optimization strategies to reduce their occupation costs. While the decentralization trend is set to continue, many corporations are also embracing Activity Based Working and use of co-working spaces to reduce costs while also providing greater flexibility. We expect these trends to continue to underpin leasing demand in general."

Report author Sophy Moffat, Research & Insight EMEA, Cushman & Wakefield, said: "As workstation costs rise, it's crucial that employers get the most out of their workforce by providing work environments to help attract and retain the best talent in a globally competitive marketplace. There's a tipping point when density is too high, or the amount of collaborative space is too low. Both can be a hindrance to people getting their work done. As competition heightens between spaces and cities, consideration of user experience and employee wellbeing is imperative."

"Technology is redefining the corporate landscape and the workplace itself. We are seeing that secondary cities are beginning to compete in the digital age in ways not possible during the industrial age. Beneath the established global contenders, the likes of Stockholm, Austin and Seoul are moving up our cost rankings. In the longer term, there will also be some rebalancing of occupancy costs across the world as talent and business orientates towards emerging economies. By 2025, more than 45% of Fortune Global 500 companies are expected to come from the emerging markets compared to just 5% in 1990."

Click here to read the full report.

About Cushman & Wakefield

Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 45,000 employees in more than 70 countries help occupiers and investors optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Across Greater China, there are 20 offices servicing the local market. The company was named the top China real estate services firm in four categories of Overall, Valuation, Agency/Letting and Research by Euromoney's 2017 Survey. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. 2017 marks the 100-year anniversary of the Cushman & Wakefield brand. 100 years of taking our clients' ideas and putting them into action. To learn more, visit www.cushwakecentennial.com, www.cushmanwakefield.com.hk or follow us on LinkedIn (https://www.linkedin.com/company/cushman-&-wakefield-greater-china)

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