Global Office Leasing Environment Expected to be Competitive This Year
The leasing environment in key global office markets is set to be competitive this year, with prime space rentals increasing by 3.6% in the first quarter of the year.
This comes despite an increase in volatility in the financial market, and the ‘JLL Global Office Index’ also highlights a quarter on quarter rent increase of 0.6% in comparison to 1.3% in the last quarter of last year.
After a cautious beginning to the year, the major real estate markets around the world appear to be back on course, along with an improvement in business sentiment, and an anticipated increase in corporate activity throughout the year, says the report.
According to this report, leasing volumes are expected to roughly fall in line with those seen in the previous year, while there is an upside potential of 5%. On the whole, JLL is forecasting prime rental growth of approximately 3% to 4% during the whole of this year.
When the figures are broken down, it shows that quarterly growth slowed to 0.3% in the Americas Index in the first quarter, that’s a decrease from the previous quarter’s 0.8% figure.
The JLL index also suggests that declines in Canada and Latin America weighed on the US’ stronger gains.
Quarterly rental growth decelerated from 1.1% to 0.6% in the final quarter of last year in Asia Pacific as total growth was encumbered by various tier one markets having poor economic conditions.
Europe’s rental growth went from 1.0% in 2015’s final quarter to 0.6% in the first quarter of 2016, however sentiment in general remained positive with no markets registering a quarterly rental fall.
It is expected that this year will represent the top of the global office development cycle’s peak, but completion levels remain considerably below the peaks of 2001 and 2008.
Furthermore, the report projects that the global vacancy rate is to stay stable for the rest of 2016.