Tokyo, London still top office rent

By Thomas Wagner
Associated Press

LONDON — London and Tokyo remained the world's the most expensive cities for leasing office space, but Paris, Moscow and Frankfurt have all moved up in the top 10, according to an annual survey released yesterday.

The study of 45 countries by real estate service providers Cushman & Wakefield and Healey & Baker found the costs and occupancy rates of office space have fallen in many cities since the second half of 2001.

The survey blamed the downturn in the telecom and high-tech sectors in many economies, the U.S. recession and the Sept. 11 attacks, which came after a prosperous year that had seen tremendous growth in office space prices around the world.

"There are clearly going to be further areas of weakness in the months ahead, but there are now some more hopeful signs," said David Hutchings, head of the European Research Group at Healey & Baker.

Using the rent, property taxes and service charges of office space in prime locations in countries around the world, the study listed the top 10 most expensive cities in 2002: London, Tokyo, Paris, Moscow, New York, Hong Kong, Frankfurt, Geneva, Bombay and Milan.

That marked a few big changes in the top 10 from the previous year's study, which ranked Paris as fifth, Moscow as 9th, Hong Kong as third, Frankfurt as 10th and Milan as 25th.

In other findings, the study said:

• The United States saw a marked rise in availability as large volumes of office space were returned to the market. New York and San Francisco were hit hard, but Washington, D.C., saw its office market improve.

• In the Asia-Pacific, rental levels fell by 6.7 percent overall, largely because of Hong Kong, where vacancies rose from 5 percent to 15 percent. Mainland China and Thailand were the only countries to post positive rental growth.