The world's prime office markets seem to be fairing well against an uncertain global economic outlook, according to both CBRE Global Office Rent and Global Capital Value Indices. Both indexes continued to rise during the third quarter (Q3) of 2011.
The CBRE Global Office Rent Index posted a year-over-year (versus Q3 2010) increase of 5.1%, and a quarter-over-quarter (versus Q2 2011) increase of 0.9% -- the sixth straight quarterly rise. The CBRE Global Capital Value Index recorded growth of 10.7% for the past year, and 1.1% for the past quarter.
"Although both rents and capital values continued to rise, quarterly growth rates lost momentum," said Raymond Torto, CBRE's Global Chief Economist. "Even in Asia--which continues to propel both indices higher --activity slowed due to global economic headwinds."
The Asia Pacific region once again buoyed the CBRE Global Office Rent Index. The Asia Pacific Office Index rose 12.9% year-over-year, reflecting a continued strong rebound from the global recession. However, the Asia Pacific index only increased by 2.2% for the third quarter, indicating that even in the region with the strongest growth, the recovery has moderated.
The Americas Office Rent Index rose 1.5% year-over-year and 0.4% quarter-over-quarter. Although the Americas Rent Index reached its trough in Q2 2010, Q3 2011 marks only the third quarter of notable rental growth, reflecting the lingering strains in the aftermath of the global financial crisis as well as the uncertainty arising from employment, consumer confidence and debt-related challenges.
The EMEA Office Rent Index had the smallest quarterly increase among the three global regions, with a 0.07% rise; however, it was the only region to improve on its quarterly performance in the second quarter, when the EMEA Index edged up 0.02%.
The following graph depicts the CBRE Global Office Rent Index over the last decade:
CBRE's Global Office Capital Value Index has also been driven by growth in the Asia Pacific region. For Q3 2011, Asia Pacific recorded the sharpest increase of the three global regions, with 16.5% year-over-year growth. However, like rents, capital value growth moderated in Asia Pacific; the region's 1.1% quarterly increase was well below the average quarterly growth rate of 3.7% since Q3 2009.
The Americas had the largest quarterly growth rate, increasing by 1.5% during Q3 2011. The region's year-over-year growth rate of 10.1% was not far below the Q2 2011's year-over-year growth rate of 10.5%, demonstrating that investor demand remains strong despite economic uncertainty.
The EMEA Capital Value Index had the smallest quarter-over-quarter and year-over-year increases, 0.8% and 5.7%, respectively. EMEA's quarterly increase of 0.8% was well below the 2.1% quarterly average since Q3 2009. This tempering in capital value growth reflects EMEA investors' heightened caution in the face of economic uncertainty and continued sovereign debt concerns.
The following graph depicts the CBRE Global Office Capital Value Index over the last decade:
The CBRE Indices were created by CBRE Research. The Global Office Rent Index is comprised of data from 123 cities around the world.