Global office real estate values and rents were largely unchanged in Q3 2012, according to CBRE Group, Inc. The CBRE Global Office Capital Value Index ticked up in Q3 with a gain of 0.6%, while the CBRE Global Office Rent Index edged down slightly in Q3, falling 0.07%.
Americas’ office property values and rents improved during the quarter, but could not fully make up for weakness in EMEA and Asia Pacific.
“Commercial real estate investors and occupiers turned more cautious in response to political, fiscal and economic uncertainty. Despite this, office rents and values have held their ground as both the leasing and value indices remain above year ago levels. We see this as a pause in the market, not a fundamental change in underlying market dynamics,” said Dr. Raymond Torto, CBRE Global Chief Economist.
CBRE Global Capital Value Indices
- The CBRE Office Capital Market Index registered 144.4, up a half a percentage point on the quarter and 2.1% year-over-year. The Q3 performance has finally reflected the economic reality of the last year.
- The CBRE Capital Index for the Americas showed the best quarter-over-quarter and yearly gains among global regions, reflecting the strength of the U.S and rising prices in Latin America and Canada.
- EMEA had a decline in capital values in Q3 and the EMEA Capital Index has hovered around 110 for the last eight quarters. The EMEA Index reached a peak in 2007 at about 130 and a trough of 100 in 2009. Most of the recovery was in late 2009, well ahead of recoveries in the Americas and Asia Pacific.
- The Asia Pacific Capital Value Index is the only Index that is above the 2007 peak level. Asia Pacific had a strong recovery from mid-2010 to the end of 2011. That recovery has now stalled in the face of reduced export opportunities resulting from Europe’s sovereign debt crisis and the U.S.’s sub-par economic recovery. The Asia Pacific Capital Index rose 0.78% in Q3 2012.
CBRE Global Office Rent Indices
- The Americas Office Rent Index rose by 0.3% in Q3. The Americas Index has risen slowly but steadily over the last year, rising 2.9%.
- By contrast, the quarter-over-quarter changes in EMEA and Asia Pacific indices for office rents were both slightly negative while the year-over-year changes were basically flat.
- The EMEA regional performance reflects the impact of the eurozone’s sovereign debt crisis and the slowing European economies.
- Asia Pacific’s weak performance this quarter reflects sluggish export demand and the impact of some new office supply in major markets.
- Certainly, throughout all regions there is considerable disparity across markets. While EMEA as a whole has seen weak rent momentum as a result of subdued demand, a few of the region’s stronger economies are better positioned including Germany, Poland, Norway, and Finland.
- Taipei and Manila both witnessed relatively strong rent growth thanks to high occupancies, demand for high-quality space and minimal amounts of new supply. Meanwhile, rent declines in Singapore and Hong Kong persist as a result of weak banking and financial sectors in both markets. In the Americas, markets with technology and energy-industry ties are outperforming the rest of the country quite noticeably. This includes Calgary, Dallas, Houston, San Francisco, Austin and San Jose.
The CBRE Indices were created by CBRE Research. The Global Office Rent Index is comprised of data from 123 cities around the world. The Global Capital Value Index uses the same sample for EMEA and Asia Pacific, while the Americas data is derived from the National Council of Real Estate Investment Fiduciaries (NCREIF) and is not built up city by city the same way as is the rent index data. The base period for the indices is Q1 2001.