Andrew Hallissey, Head of Client Solutions, Global Corporate Services, CBRE, said: "Global economic sentiment is upbeat, due in part to subsiding worry of a double-dip recession and ongoing news of strengthened growth in many of the world’s emerging markets, including Latin America and Asia Pacific.
"Much of the world’s strongest economic growth has been captured by emerging markets. We have experienced a surge in demand for prime office space from multinational companies with an increased desire to manage their global real estate operations strategically, in locations where strong growth and promising economic markets exist. In doing so, a trend for increased global office development has arisen in emerging markets."
Unsurprisingly, the strongest forecasts for office development activity in 2011 and 2012 are in regions experiencing the most robust economic growth. Thus, much recent office development is occurring not in the world’s advanced economies, but instead in emerging markets where strong economic growth persists.
Richard Holberton, Director of EMEA Research, CBRE, said: "Global corporates continue to fuel the Asia Pacific office market, as the region returned to levels of demand not seen since prior to the global financial crisis. During the course of 2010, 43 million sq ft, or 46% of newly developed office space across the world was in Asia.
"In 2011, CBRE expects that nearly 55 million sq ft of new office developments will take place in Asia, 62% of the global total. Although the rising cost of moving and occupying office space may start to slow business expansion, the demand for property is likely to result in strengthening absorption levels in 2011."
In response to the past several quarters of economic uncertainty, office markets across the world continue to experience a "flight to quality" where tenants are taking advantage of low rents for prime office space, and many occupants are seizing the opportunity to upgrade or expand their office space into newer, higher-quality buildings.
Prime office rents in Europe increased by 2.7% over the course of 2010, and growth continues to be driven by a handful of markets including London, Paris and Moscow, although several other cities are also starting to show the first signs of rental recovery.
Germany has experienced one of the strongest economic recoveries in Europe, and demand for office space has also recovered there. For instance in Frankfurt, annual take-up reached 473,000 sq m in 2010, which was 32% higher than in 2009 and was characterised by a relatively high share of owner-occupied space.
Andrew Hallissey, Head of Client Solutions, Global Corporate Services, CBRE, said: "Business confidence in Germany continues to be robust and Germany currently stands as one of Europe’s best performing economies. German corporates are very focused on growth and expansion both domestically and internationally as a result. Demand for well-priced, high-quality office space in the best central locations will continue into 2011, and we expect rents to remain stable for the short to medium-term."
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