The Most Expensive Office Location in the World
*Cue a pop culture reference for those of a certain vintage…
New York, London, Paris, Munich, everybody’s talking about…not pop music, but massive rents.
For years, the Hong Kong Central District has been the world’s most expensive location for premium office occupancy, but in 2020, there was a new sheriff in town.
At the end of 2020, London’s West End overtook Hong Kong as the world’s most expensive commercial property market when rent, service charge and business rates have been factored in and our town stayed at the top of the tree throughout 2021.
The all-in occupier cost for the West End is around £204, with Hong Kong (£195), Tokyo (£130), Midtown Manhattan (£124) and the City of London (£119) following closely behind.
Led by the prime markets in New York, Los Angeles and Chicago, the US as a whole saw a modest 2% increase but most EMEA markets saw all-in costs down by an average of 5%, thanks in part to the volatility of the currency markets.
Asia-Pacific was down an average of 2% but individual cities varied dramatically with Shanghai up by 5% but Delhi down by double-digits, around 11%.
What is clear is that even though we seem to be emerging into a post-Covid ‘next normal’, a great deal of people who were in West End offices in 2019 are still working from home – at least part of the week – and will continue to do so.
As we mentioned in a post from early summer 2020, a number of big employers (Mondelez International, 90,000; UBS, 70,000; Barclays, 47,000) were questioning whether they needed such big, expensive prime city centre offices and combined with a clearer focus on ESG, a reliance on super-prime deals to nudge the stats upward and an incredibly fluid market, the quality over quantity trend carries weight as London sits at the top of the tree.
The World’s Highest Rents
In terms of rent-only prices, London is also the world leader.
Back in 2019, it was widely reported that hedge fund Steadview Capital paid a staggering £250 per square foot for 3,000 square feet at 30 Berkeley Square, beating the previous record set in 2017 by Canadian billionaire businessman Lawrence Stroll.
The vintage Ferrari collector and Executive Chairman of Aston Martin paid £190 per square for around 4,000 square feet at 5 St James’ Square. This in turn beat the £185 per square foot paid by Helly Nahmad Gallery two years previously for offices, also in St James’ Square.
But, in November 2020, an unnamed private family office paid what is certainly the UK’s highest ever rent and what is believed to be the world’s highest recorded rent, £277.50 per square foot for 2,700 square feet on the sixth floor of 30 Berkeley Square.
As we move deeper into 2022, core West End office rents, on average, remain relatively flat but we are seeing the differences between Grade A stock and second-hand Grade B stock starting to get more and more obvious.
The message here is quite clear. If you are sitting on property in Berkeley Square or St James’ Square and you don’t know what to do with it, spend a few quid getting it just so and call us to market it for you. Then we can all start collecting Ferraris like Mr Stroll!
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