Tokyo Office Rentals Push It to World's No. 2, London Tops List

Tokyo Office Rentals Push It to No. 2 Behind London's West End

Aug. 16 (Bloomberg) -- Central Tokyo office costs have risen by 13 percent in the past year, making it the second most expensive rental area in the world after London's West End, the real estate broker CB Richard Ellis Group Inc. said.

The total occupancy cost of prime space in Tokyo's inner central district rose in the past 12 months to $131.10 per square foot a year, trailing only the West End, the broker's report said. Similar rents in London's financial district slipped 0.3 percent to $119.11 a square foot, dropping it to fourth from second. Paris at No. 5 and Moscow at sixth showed rents in continental European cities to be rising faster outside the U.K. than in Britain.

A lack of speculative office developments and rising demand, particularly from financial companies such as banks and insurers, have combined to cut vacancies, prompting owners to raise charges or cut such incentives as rent-free periods, today's report said.

``Strong demand and diminishing space availability acted to boost rental growth in most major business centers in Asia,'' the broker said, offsetting weakening economic conditions in Europe. ``The slow recovery in the office market has gathered pace so far this year.''

Total occupancy costs, including taxes and maintenance charges, in London's West End rose 0.7 percent over the past year to $178.67, the report said. Midtown Manhattan has the most expensive office space in the U.S. at $53.69. That's 27th of the top 50 locations as measured by CBRE compared with 20th a year earlier when costs totaled $52.04.

Moscow jumped to the sixth most expensive place in the world for offices behind the two London districts, two in Tokyo and Paris. Costs now total $85.29 per square foot a year in the Russian capital, 29 percent higher than a year earlier as high levels of construction failed to keep pace with demand, the report said.

Eight of the 20 most expensive office locations in the world are in the U.K., the report said, including four in the top 10.

Top 10 for Office Rental Costs:
1. London's West End
2. Inner Central Tokyo
3. Tokyo's Outer Central District
4. London Financial District
5. Paris
6. Moscow
7. Dublin
8. Hong Kong
9. Edinburgh
10. Manchester, England

To contact the reporter for this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net

Last Updated: August 16, 2005 11:18 EDT