Istanbul ranks 105th expensive city in office occupancy costs
Posted by meb at March 24th, 2007
Istanbul, where the recent sale of the Istanbul Transportation Authority (İETT) land to Sama Dubai for YTL 1.150 billion this week has boosted the price of a square meter of land to $18,000, has become the world’s most expensive 105th city in terms of office costs. Occupancy cost, defined as the average total cost of leasing prime net usable space, is $4,500 per workstation per annum in Istanbul. In 2007, an office in Istanbul with 100 employees would have an annual cost of $450,000.
A survey done by DTZ Debenham Tie Leung, a global real estate adviser, revealed that significant increases in occupancy costs are expected in 2007 due to robust demand. According to the survey titled “Global Office Occupancy Costs Survey 2007,” the professional, financial and IT/telecommunications sectors continued to dominate take-up in most countries. Global economic growth provided the basis for sustained demand for office space in key business districts.
Meanwhile, there is a large proportion of available office space under active negotiation. New projects under construction are increasingly being pre-let. In some locations, robust demand for prime office space has spilled over to suburban areas and brought about broad-based improvement in occupancies.
Occupancy costs are defined as the average total cost of leasing prime net usable space. This is defined as modern, well-specified office space of 10,000 square feet (929 square meters) within a prime Central Business District location. They include rent and outgoings, such as maintenance costs and property tax, if these are normally payable by the occupier but exclude rent-free periods, fitting out costs and other leasing incentives.
According to DTZ’s survey, Istanbul’s office occupancy cost per workstation per annum is $4,500. With this figure, Istanbul ranks 105th among 134 cities in 48 countries. According to the list, London, Hong Kong and Paris rank the highest in office occupancy costs. London’s office occupancy cost per workstation per annum is $23,260, Hong Kong is $19,730 and Paris is $17,770.
The Global Office Occupancy Costs Survey 2007 also revealed that increased demand from financial and law firms drove increases in office occupancy costs in New York. Nationally, on the whole, occupancy costs increased due in part to higher demand, construction costs and energy expenses. In Asia Pacific locations, high levels of absorption coupled with limited new supply led to increased occupancy costs. Asia Pacific locations are benefiting from strong demand for prime office space with some markets experiencing unprecedented levels of absorption leading to increased occupancy costs. Demand continued to be sourced from banking, insurance, financial services and IT/IT-enabled services with many locations experiencing a landlord’s market.
Most expensive region:
Globally, Western Europe remained the most expensive region with an average cost of $10,020 per workstation. Strong demand drove occupancy costs up London (West End), Paris and London (City) remained the top three most expensive locations in Europe for the third consecutive year. Rental increases in London continued to be driven by high occupier demand and a lack of Grade A stock. However, the cost gap between London (West End) and Paris further widened from $2,730 in 2006 to $5,490 per workstation per annum in 2007.
Among Central and Eastern European cities, where Istanbul is cited, Moscow continued to maintain pole position with $8,300. Kiev is the next most expensive location with $7,350. The majority, or 65 percent, of new office supply in Moscow is outside the CBD with a decreasing share of newly built and reconstructed Class A office space. New trends include the increasing scale and multifunctionality of projects and increased interest in old industrial sites with open plan facilities, high ceilings and high floor load capacity suitable for redevelopment into office centers and business parks.
source: Turkish Daily News
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