World

Sky High

March 15, 2002 / 7:40 AM EST / AP

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

The study of 45 countries by the Cushman & Wakefield and Healey & Baker real estate service providers said 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 terrorist attacks in America, which occurred after a prosperous year that had seen tremendous growth in the prices of office space 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, the 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 as 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 had seen Paris as No. 5, Moscow as No. 9, Hong Kong as No. 3, Frankfurt as No. 10 and Milan as No. 25.

In other findings, Friday's study said:

In Europe, the average vacancy rates increased from 3.75 percent to 5.4 percent; overall rents grew over the year by 1.5 percent, compared to 15 percent in 2000; rents were largely static in central and Eastern Europe, but rose by 18 percent in Moscow.

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 hard hit, but Washington, D.C., saw its office market improve.

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

In the survey, which measures the total occupancy costs of office space per square meter per year, London placed No. 1, at 1,728 euros ($1,525), and Tokyo was second at 1,213 euros ($1,070).

For the next three, the prices fell to 991 euros ($875) in Paris, 985 euros ($869) in Moscow and 976 euros ($861) in New York.

The second 10 most expensive cities on the list were: Athens, Greece (11); Stockholm, Sweden (12); Seoul, South Korea (13); Dublin, Ireland (14); Luxembourg City, Luxembourg (15); Madrid, Spain (16); Warsaw, Poland (17); Singapore (18); Bucharest, Romania (19); and Taipei, Taiwan (20).

By Thomas Wagner

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