More stability in office markets around world, says agentCommercial office markets around the world are more stable for the first time in several years, a new report reveals.
International office markets have more of a balance between supply and demand, says leading agent Colliers International.
Although some markets are lagging, most are experiencing more stability than they have in some time, according to its New Global Office research report.
Director of Research, James Cook, says, “Office markets around the world have survived the challenges of a slowing Chinese economy, a mixed American recovery, and a European market that is still finding its economic footing. Now, for the first time in several years, we’re experiencing balance on a global level.”
Colliers points to several key trends in 2013 that underscores this:
• United States and Canada: Strength in the ICEE (intellectual capital, energy and education) markets remain the primary driver of office employment growth this year, with the vacancy rate improving to nearly 14% in the first quarter of 2013, dropping for the fifth consecutive quarter. Meanwhile, a strong rebound in the residential housing market is poised to benefit US suburban office markets, as companies open offices and resume hiring to cater to new developments, particularly in hard-hit markets like Phoenix, Las Vegas and parts of Florida.
• Mexico City: Office development is strong, with 20 new buildings developed in 2012, 54 more under construction in the first quarter of 2013, and a 17% rise in absorption. In the next five years, Mexico City’s office inventory is expected to increase by about 3.2 million square feet, but with a stable vacancy rate, the market should have enough absorption to fill the new properties.
• Beijing: While demand for Class A space fell in the second half of 2012 and absorption also fell significantly, overall rental rates still grew by nearly 20%. Demand is expected to remain largely stable for the remainder of 2013.
• Sydney and Melbourne: Domestic investment has doubled since 2011, now making up 78%, and is expected to remain strong. The leasing market remains slow despite tightening vacancy rates, positive absorption and rental growth, with most activity focused on lease renewals and consolidations. In Melbourne, a lack of business confidence has led to a slowdown in demand and tenant commitment. However, Colliers experts expect certainty to return to the market and drive demand in 2014.
• Mumbai: Office absorption rose through 2012 despite occupier caution, with demand driven by the banking, financial services, insurance and IT industries. Colliers expects healthy demand to continue in 2013 with The Andheri, BKC, and Lower Parel submarkets the preferred destination due to availability of Class A space.
• Europe: While the threat of a Eurozone break-up has diminished, the European office market continues to operate at a slow pace, with pockets of rental growth in parts of Northern Europe like Germany and the Nordics, and rental weakness across most of Southern Europe and some fringe Central and Eastern markets. In Germany, occupier demand began rising in the first quarter of 2013, while demand in Paris is expected to stabilise this year.
The report also covers South American markets Sao Paulo, Rio de Janeiro, Buenos Aires, Bogota and Lima; Asian markets Beijing, Shanghai, Hong Kong, Tokyo and Seoul; Australian markets Adelaide, Auckland and Wellington; Indonesian markets Singapore, Taipei and Makati; Indian markets Mumbai, Delhi, Bangalore and Chennai; as well as European markets Germany, Paris, London, Manchester and Dublin.