Global rents survey puts Midtown as most expensive in US.

According to CB Richard Ellis' just released annual survey of Global Market Rents, of the top 50 most expensive office locations in the world, 29 experienced a decrease in total occupancy cost (in dollar terms) over the last six months.

In Rome, Toronto, Paris and Milan the decrease was over 10%. As the dollar has stabilized over the last six months, gaining slightly against some currencies, this decrease can be attributed to falling rental values. Outside the top 50, the biggest fall was in Caracas, Venezuela, where the occupancy cost has fallen by 30% over the last year to $20.62/sq ft/annum.

The most expensive US location is now Midtown Manhattan, which ranks 20th at $52.04/sq ft/annum. Washington DC and Boston, the only other U.S. cities sited in the Top Fifty, ranked 27th and 29th respectively. San Francisco and San Jose ranked in the top ten of the Top Fifty in the second quarter of 2001, but due to the dotcom crash at the end of 2001 are now ranked 62nd and 68th respectively.

However, US rents are likely to increase in the coming months given that national vacancy rates are decreasing and the economy is improving.

In 17 of the top 50 locations, total (dollar) occupancy cost rose. Three of these experienced increases of over 10%: London's West End, New Delhi and Hong Kong. The biggest increase among all 158 locations surveyed, came in London's West End, where there was a 19% increase in occupancy cost over the last six months.

This increase maintains London's West End as the most expensive office location in the world at $177.39 /sq ft/annum, with a much increased margin. Not only has there been a slight increase in the value of sterling against the dollar, but the West End has experienced a sharp rise in prime office rents over the last six months. There is now a 48% difference between the total occupation cost in the West End and the second most expensive location, which is London's 'City' area at $119.49/sq ft/annum.

Out of all 158 locations surveyed, there were 43 markets where (dollar) occupancy costs increased, compared to 105 that experienced a fall.

There are only two new entries in the global top 50 most expensive office locations since the last survey at the end of 2003. Both are markets in Shanghai (Pudong and Puxi). As China's currency has a fixed exchange rate with the dollar the rise of these two locations up the global league table is as a result of changes in value locally.

Over the last three years the top 50 has been remarkably stable, with only nine changes in total. Nearly all of these have been European cities that have entered the top 50 at the expense of US cities.

The sharp fall in the value of the dollar since mid 2003 and significant falls in rental values following the dot.com crash in 2001 and the subsequent economic downturn, has left US markets looking very inexpensive compared to those elsewhere in the world.

There are now only four US locations in the top 50, compared to ten three years ago.