Jakarta is likely to have the biggest jump in office rents globally through 2014 as technology and financial-service firms expand into emerging markets, Cushman & Wakefield said.
Office rents probably will climb 79 percent in the Indonesian capital from the end of last year through the fourth quarter of 2014, according to the brokerage’s Global Office Forecast, released today. Sao Paulo is likely to have the second-biggest increase, at 59 percent, followed by San Francisco with a 33 percent gain, according to the report. London rents are expected to rise 21 percent, ranking it No. 10 on Cushman’s list.
While rent increases will slow in much of the Asia Pacific region, particularly in developed markets, the area will benefit from continued economic growth and the expansion of companies into cities where they lack a presence, said Maria Sicola, executive managing director and head of Americas research at New York-based Cushman.
“Growth is slowing in mature markets but what we’re seeing is that emerging markets are coming into favor,” she said in a telephone interview. “Corporations are looking to become more global -- to increase their footprint where they don’t currently have occupancies. Indonesia is now open for business and has become much more attractive for companies.”
South America will “enjoy solid growth” next year, Cushman said. Rents at top-tier office buildings in Sao Paulo probably will climb 60 percent by 2014, helped by growth of Brazil’s middle class and preparations for the 2016 Olympics, Sicola said. New office buildings are opening at “higher price points, which is driving rent-price increases,” she said.
“Companies are willing to pay a premium to be there,” Sicola said.
While office-rent growth in most of the U.S. will be “lackluster” next year, San Francisco will benefit from having few new buildings and from growth in the technology industry, Sicola said. It’s the only U.S. city among the 10 Cushman expects to have the biggest rent increases worldwide.