CHICAGO, IL- GlobeSt.com reported on Tuesday that DTZ just released its 16th annual Global Occupancy Costs-Offices survey and found that costs for office space in Asia and the United States were trending in very different directions. North Asian costs increased by 6.3% but American costs went down by 10.9%. The primary driver of that decline was the search by American tenants for greater efficiencies in the workplace. Employers have generally found that younger workers especially don't need or want as much space as their elders.

But Karine Woodford, the head of occupier research at DTZ, a London-based company, tells GlobeSt.com that American costs will probably rise over the next two years. “We do forecast occupancy costs growing at a slow rate because rents will steadily increase as job growth begins in earnest,” she said. That does not, however, mean that the search for efficiency has ended. American workplaces still have more space for each employee than other nations and “tenants here have not taken advantage of all the efficiencies.”

The sharp rise in occupancy costs in North Asia was driven by the markets in China's glittering super-cities such as Beijing, which grew more than 17% in 2012, but this could change. “The Beijing market is characterized be a severe shortage of office space, with overall market vacancy at only 2.8% at year-end 2012,” Woodford said. “Looking ahead, continued strong domestic demand together with the injection of new good quality space will drive rental growth, and thus occupancy costs in China's capital city, but nowhere near the heady increases endured by tenants in 2011-12.”

One relatively new aspect to DTZ's annual GOCO study is the analysis of occupancy costs for secondary or average-grade buildings. This was the second year that they have looked at these numbers, and found that in 2012 costs for these offices rose an average of 4.2%, compared to the global increase of only 1.0% for prime locations. “The reason behind this is that increasingly occupiers are looking for secondary space as prime stock is limited and expensive – hence driving rent increases in average-grade buildings. We expect the gap between prime and secondary to continue to accentuate in some of these markets going forward.”

Instant Insights /

Occupancy Costs Will Start Growing in U.S.

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