NEW YORK — Led by Manhattan, the United States occupies seven of the 10 most expensive office markets in the Americas region as determined by Cushman & Wakefield’s annual Office Space Across the World report. The Americas region is defined as North and South America. The top three — Manhattan, Rio de Janeiro’s Zona Sul and Sao Paolo’s Faria Lima — were unchanged from the 2013 report. Worldwide, Manhattan came in at No. 3 following London’s West End and Hong Kong’s central business district (CBD).
New York City’s Manhattan market continued to post employment growth in 2014, much of which is office-using jobs in the technology, advertising, media and information industries. Leasing activity in Manhattan totaled roughly 32.8 million square feet in 2014, which is the highest net absorption in the market in the past 15 years, according to the report. Leasing was bolstered by 28 leases in excess of 100,000 square feet.
The market’s vacancy rate dipped into the single digits in December 2014 for the first time since July 2012. The market fundamentals pushed rates to $130 per square foot in Manhattan, barely edging out Rio de Janiero.
“The U.S. economic recovery is quickly propelling the Manhattan office market beyond equilibrium in favor of landlords, resulting in [a reduction] in the amount of quality office space available, which will lead to solid rental increases in 2015,” says Ron Lo Russo, president of Cushman & Wakefield’s New York tri-state region.
Houston’s CBD came in at No. 9 at roughly $53 per square foot. Houston’s office market is driven by the oil and gas sector, which has seen the price per barrel of oil drop drastically during the past several months. The price of West Texas Intermediate (WTI) crude dropped to $43.06 per barrel as of this writing, a steep drop from nearly $100 per barrel in July 2014. The decrease did not impact Houston’s office rental rates in 2014, but the effect is expected to be felt in 2015, according to Cushman & Wakefield.
Bogota in Columbia experienced a 26.2 percent increase in rents from 2013 to 2014. Posting a rental rate of $65 per square foot, the market moved from the 14th position in last year’s report to sixth in 2014.
Globally the world’s office market rental rate rose 7 percent in 2014. Cushman & Wakefield expects rates to rise again in 2015 due to limited supply available.
— John Nelson