Global Markets Move Toward Equilibrium
LONDON—According to a new Global Office
Report by Colliers International, rebounding global markets are aiming for a state of
economic supply and demand equilibrium,
despite challenges in China, the US and
Europe. While some markets may still be
sluggish, the majority are more stable than
they have been in some time.
“Office markets around the world have
survived the challenges of a slowing Chinese
economy, a mixed American recovery and a
European market that is still finding its eco-
nomic footing,” says James Cook, director of
research at Colliers. “Now, we’re experienc-
ing balance on a global level.”
Colliers experts point to several key
trends in 2013 that underscore this search
United States and Canada: Strength in the
intellectual capital, energy and education
sectors will remain the driver of office-using
employment growth through this year.
Vacancy rates improved to nearly 14% in
the first quarter of 2013, dropping for the
fifth consecutive quarter. Meanwhile, a
strong rebound in the for-sale housing market is poised to benefit US suburban office
markets in 2013.
Mexico City: Office development is strong,
with 20 new buildings developed in 2012, 54
more under construction in the first quarter
of 2013, and a 17% increase in absorption.
In the next five years, Mexico City’s office
inventory is expected to increase by about
3. 2 million square feet, but with a stable
vacancy, the market should have enough
absorption to fill the new properties.
Beijing: While demand for class A space
decreased in the second half of 2012 and
absorption also decreased significantly,
overall rental rates still grew by nearly 20%.
Demand is expected to remain largely stable
for the remainder of 2013.
Sydney and Melbourne: Domestic investment has doubled since 2011, now making
up 78%, and is expected to remain strong.
The leasing market remains slow despite
tightening vacancy rates, positive absorption and rental growth, with most activity
focused on lease renewals and consolidations. In Melbourne, a lack of business confidence has led to a slowdown in demand
and tenant commitment. However, Colliers
experts expect certainty to return to the
market and drive demand in 2014.
Mumbai: Office absorption rose through
2012 despite occupier caution, with demand
driven by the banking, financial services,
insurance and IT industries. Colliers expects
healthy demand to continue in 2013 with
the Andheri, BKC and Lower Parel submarkets the preferred destination due to the
availability of class A space.
Europe: While the threat of a Eurozone
break-up has diminished, the European
office market continues to operate at a
slow pace, with pockets of rental growth in
parts of Northern Europe like Germany
and the Nordics, and rental weakness
across most of Southern Europe and some
fringe Central and Eastern markets. In
Germany, occupier demand began rising
in the first quarter of 2013, while demand
in Paris is expected to stabilize this year.
The report also covers South American
markets Sao Paulo, Rio de Janeiro,
Buenos Aires, Bogota and Lima; Asian
markets Beijing, Shanghai, Hong Kong,
Tokyo and Seoul; Australian markets
Adelaide, Auckland and Wellington;
Indonesian markets Singapore, Taipei
and Makati; Indian markets Mumbai,
Delhi, Bangalore and Chennai; and other
European markets—David Phillips
North American Liquidity Tops All Regions
DTZ Research has released its 39th edition of Money into Property.
The report analyzes the size and structure of global commercial real
estate investment markets, as well as investor and lender sentiment.
The year-over-year changes were substantial: following growth of
8% in 2011, invested stock grew by a more modest 1.5% in 2012 to
reach a record level of US $12.4 trillion. Asia
Pacific was the only region to post growth in
2012 as its invested stock grew 8% to US $4.2
trillion—the region is
now close to surpassing
Europe to become the
region with the largest stock. In North America,
stock fell by 0.5% driven by a fall in the US stock.
Following growth in 2011, the stock in Europe
fell 2.6% to US $4.4 trillion.
Despite low global growth, the focus on further downside potential has receded over the past year. The macro outlook is more balanced and the recovery is expected to continue. North American
invested stock edged down by 0.5% despite 8% growth in both
Canada and Mexico. The fall in North American stock has been
driven by further deleveraging in the US. The value of outstanding
debt in the US fell 2.5% in 2012, which more than offset increases in
equity holdings. But, the repercussions of this will be less severe than
By John Wickes
Based on its Lender and Investor Survey, DTZ Research maintains that global property market sentiment remains mixed, despite
the improving macro outlook. Lenders are more cautious than
investors in their annual survey. Most investors feel buying opportunities have returned to normal and that debt availability has
improved. DTZ Research believes sentiment has been slow to
improve due to inflated expectations. Despite this, things are not as
bad as they seem.
North American investment volumes were up 15% in 2012, the
strongest of any region. Cross-border volumes have returned to
their 2005 level. Volumes might be restricted going forward due
to lack of sellers.
All US markets are classified as attractive or very attractive, ahead
of Europe and Asia Pacific. In fact, relative value is at the best level in
six years, due to lower bond yields and better growth outlook.
North American liquidity tops all other regions. With relative
value abundant globally, DTZ thinks investors will look at liquidity
more closely. North American markets will be a net beneficiary of
this in the future.
(This column originally appeared in slightly different form on GlobeSt.com.)
John Wickes is head of DTZ Research for the Americas in Chicago. He
may be contacted at email@example.com. The views expressed in this
column are the author’s own.
Vital Signs... Twenty cities across Africa offer potential for CRE growth by 2020.—Jones Lang LaSalle