London Records Fastest Growth in Skyscraper Commercial Rents in the World
Commercial rents in London’s prime skyscrapers are rising faster than those in any other global city, according to the latest index specifically for office tower blocks.
The Skyscraper Index from international real estate firm Knight Frank, which examines the rental performance of commercial buildings over 30 storeys across the world, shows that rents in skyscrapers in London rose 9.7% in the second half of 2015.
London also topped the table for rental growth in the previous Skyscraper Index, which covered the first half of 2015.
This far outstripped the growth in rents seen in other global cities, with rents in skyscrapers in San Francisco and Hong Kong rising 4.76% and 3% respectively over the same period.
Singapore was the only global city where skyscraper rents significantly decreased for the period, with the 4.75% drop attributed to over-supply and diminishing occupier confidence as a result of the slowdown in the Chinese economy.
Rents in Hong Kong’s skyscrapers continue to be the highest in the world by some margin, reaching $263 per square foot in the second half of 2015. New York retained its second position, where skyscraper rents are currently $155 per square foot, followed by Tokyo at $129 per square foot.
‘There has been much debate around the future of London’s skyline, but the rental performance of the capital’s skyscrapers points to the fact there is huge demand for space in landmark, tall buildings and we expect the upward pressure on rents to continue,’ said Will Beardmore-Gray, head of Knight Frank's Tenant Rep and Agency Business.
It is the second time in 12 months that London is the fastest growing office tower market in the world due to its diversity of occupier demand and constrained supply.
Ally McDade, Knight Frank research team associate, also pointed out that in the United States the rapid expansion of the tech sector is underpinning rental growth for towers in cities like San Francisco and Boston.
‘Interestingly, Mumbai’s emergence as a top performer has benefited from growth in tech, as it surpassed financial and business services as the top occupier of office space in the second half of 2015,’ McDade added.
Some locations have seen rents fall, including Singapore with a decline of 4.76% over six months, Beijing with a fall of 0.71%, Frankfurt down 1.16%, and Toronto, La Defence in Paris and Dubai seeing no change.
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