Skyscraper prime office rents in New York have dramatically increased by 20% to hit $150.00 per sq ft since July 2014, outperforming the leading Asian skyscraper city, Hong Kong. However, Hong Kong still boasts the world’s highest skyscraper office rents at $250.50 per sq ft.
The figures were reported in the latest Skyscraper Index from Knight Frank and Newmark Grubb Knight Frank, which ranks the world’s cities as centres for high rise offices and homes.
New York rental values have boomed as skyscraper development has increased, with towers proving popular workplaces for the expanding digital and creative firms in the city, as well as financial and professional firms.
However, Hong Kong’s large lead in rents reflects a low vacancy rate and constrained CBD area.
William Beardmore-Gray, head of global leasing services at Knight Frank, said: ““A high quality office environment is an essential part of building a business. With the economy improving, firms want offices that provide an inspiring place to work and demonstrate they value their employees.”Note: The Skyscraper Index ranks cities according to a score system based on a range of criteria including skyscraper office rents and yields, the spread offered by investment yields compared to national bonds, the number of high rises built, and growth prospects for the city.
(Source: Knight Frank Research, Newmark Grubb Knight Frank, Sumitomo Mitsui Trust Research Institute)
“Today the rent paid on an office workstation is usually less than the fee paid to a head hunter to replace a person who leaves. So companies want to use their offices as a way to make staff feel they are valued and important. You achieve that when you put workers in the building that appears as the backdrop during the stock market report on the evening news.”
James Roberts, chief economist at Knight Frank, said: “We are now seeing the western cities erode the lead of big Asian centres in tower office rents. For premium floors with views rents are rising in Hong Kong, but they are increasing much faster in New York. Similarly London is closing the gap on Tokyo.”
“Economic growth prospects for this year favour locations like New York and London, so I see these cities stepping up competition on the Asian centres. Many people like to say that the balance in the global economy is shifting from west to east, but certainly skyscraper rents provide another indicator that shows this is not entirely the case.”