Global Office Space Leasing: Competitive Environment to Continue in H2 2016?

From: Commercial Office Bangalore
Published: Wed Jun 29 2016


With rents on prime office spaces up by 3.6% (compared to 2015), office leasing environment has been highly competitive across the globe in the first half of 2016. Most of the major office space markets have seen a quarter-on-quarter rent increase (at least by 0.6%). So, will the same continue in the second half? It seems yes! With the major real estate markets across the world getting back on track, the overall market sentiment looks positive as it has given a great start to the year.
According to a property research firm, the business sentiment is improving and the corporate activity is also expected to ramp up over the course of 2016. The research shows that leasing volumes matching those of 2015 and has also shown some upside potential (5%) which has strengthened the global occupier demand throughout 2016.
Breaking down the figure
• The figures in the report show that America’s index slowed down in the rental growth in the first quarter of 2016 (from 0.8% to 0.3%). It also says that the decline in Canada and Latin America weighed on relatively stronger gains in United States. Whereas in Asia Pacific, the quarterly rental growth slowed down from 1.1% in Q4 2015 to 0.6% in Q1 2016 as the overall growth was hindered by the lustreless economic conditions of several tier-one markets.

• Europe saw a moderate rental growth from 1% in fourth quarter of 2015 to 0.6% in the first quarter of 2016%. The overall sentiment is continuing to be positive and no markets have registered quarterly rental falls. The figures of Middle East and North Africa rose by 2.7% in the first quarter of 2016; but it seems to have slowed down when compared to the rental growth of final quarter of 2015 (7.4%).

• While the on-going year is anticipated to represent the peak of office development cycle across the globe, still the completion levels are below the peaks seen in 2001 and 2008. Also, the global vacancy rate is projected such that it remains stable for the rest of the year.

• The office leasing volumes in Asia Pacific were up by 7% in Q1 2016, and the region is also expected to outperform the growth for the rest of the year, supported by the outsourcing markets and sustained strength of domestic occupiers in China.
According to the reports, with a strong employment growth in the pipeline ahead, the market leverage is expected to shift towards the landlords. As the result, office index of America regains the momentum over the course of 2016 with the rental growth exceeding by 4% on an annual basis.
Prime rents are expected to remain stable in Middle East and North Africa over 2016, as the office space markets in the region continue to be tenant-favourable. The flock in quality seen in the recent quarters is expected to carry on which results in two tier markets with great demand for Grade A space. Though there is a slight fall in rental growth if we consider quarter-on-quarter, the overall market for leasing has been positive in the first half of 2016, and the same is expected to continue in the second half too.
Company: Commercial Office Bangalore
Contact Name: pamelajoe
Contact Email: commercialofficebangalore1@gmail.com

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