Of the 176 cities CBRE tracked, 133 saw occupancy costs dip.Roughly 33 markets registered double-digit percentage pointdeclines, while 53 markets—smaller ones impacted by shifts in keymarket assets—witnessed annual increases, according to thesurvey.

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So how does this reflect on the much-touted global recovery? Ifrates are still dwindling in a number of major markets, what doesthat say about the rebound? "Commercial real estate lags theeconomy," CBRE's chief global economist, Raymond Torto, remindedparticipants on this morning's conference call announcing thesurvey results. "A lot of the decline we tracked occurred in thefirst couple of months of 2009," but the rates will likely continueto bottom out this year, he noted.

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But all hope is not lost, chimed in Michael Haddock, director ofCBRE's Global Research and Consulting. "Within a year or two, therewill be rental growth in prime office space," he said. Historicaltrends have shown, he added, that economic recover is followed byemployment growth, then occupancy and finally rental growth.

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Some markets have been quite capable of maintaining strong—ifnot exorbitant—office rents. London's West End certainly retainedits title as the world's most expensive office market, with anoccupancy cost of $182.94 per square foot.

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"In the past two quarters, we've been seeing an uptick in rentin London," said Haddock, who also heads CBRE's EMEA regional realestate investment market research team. He noted, however, that,"Only the best areas of the city are seeing strong rents, which isdriven by the fact that the financial district is performingwell."

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Currency fluctuations, according to Torto, played a significantrole in determining which markets had the highest office costs.Rates measured in US dollars were impacted by changes in the valueof the dollar versus the respective currency. In spite of recentdepreciation of the British pound, for instance, it still holdsmore weight than the dollar.

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Overall, Europe, the Middle East and Africa, or the EMEA region,continues to contain the wealth, 29 in total, of the top 50 mostexpensive markets. Paris and Dubai, for instance, continue to postrents well above $100 per square foot. And Moscow rounded out thetop five priciest markets, collecting average rents of $125.10 persquare foot—down 26.5% from the previous period, however. Indeed,the EMEA region experienced an annual decline of 6.2%, with rentalrate drops in 44 of its 57 markets.

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Meanwhile, the Asia Pacific region boasted three of the top fivemost expensive markets. Hong Kong, with an average $153.20 persquare foot, ranked second, pushing Tokyo to the third spot, withrents penciling in $143.99 per square foot. Mumbai, with officeoccupancy costs of $125.76 per square foot, moved up to fourthplace, thanks largely to the appreciation of the Rupee to thedollar.

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Despite seeing some gains in rates, Asia-Pacific witnessed thelargest collective decline in occupancy costs with a drop of 9.2%.Still, several Asian markets are experiencing a rebound in rents,as demand for office space improved in the first few months of thisyear.

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North America posted a below average decline of 3.3%year-over-year, making the region the third weakest with risingvacancy in 51 out of its 77 markets. Further south of the equator,the Latin American market—predictably led by Brazil—was the onlyregion to log an increase in year-over-year office rates.

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Torto pointed out that Brazil, whose economy continues to be amajor growth engine, has a bifurcated office market that offersinvestment opportunities. "There is quite a bit of prime officespace in Brazil," he said. "But about 40% of Brazilian office inRio de Janerio and Sao Paulo is without air condition. So there isa scurry of activity to develop class A office.

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