Occupancy costs in Europe will fall in real terms next year, despite a rapidly recovering global economy, a dearth of new stock and increasing demand for space.
Europe remains the most expensive region, according to DTZ’s 2014 Annual Outlook, but average rises in most markets will be below inflation. Secondary rents will begin to play catch up.
Asia Pacific is expected to see the highest regional average cost increase in 2014. This comes despite rising forecast vacancy rates across the region and an inflation-driven hike in rents. Outside of New York and San Francisco, DTZ expects moderate rental growth in most US office markets.
Magali Marton, CEMEA head of research at DTZ and co-author of the report, said: “Most of the cities with high productivity, including London, Paris and Frankfurt, also have high occupancy costs.
“In contrast, Moscow is the least affordable market, combining high costs with low productivity.
“Smaller markets such as Copenhagen, Brussels and Rome ?are shown to be especially affordable. All three are more affordable than the European average, providing a good alternative for occupiers looking for expansion in key ?sub-regions within Europe.”
