Global office real estate values and rents were mostly steady in the fourth quarter of 2012, according to new data released by Los Angeles-based CBRE Group Inc.
The CBRE Office Capital Value Index registered 146.1, up 0.6% on the quarter and 1.9% year-over-year. The CBRE Capital Index for the Americas – dominated by the U.S. market – noticeably outpaced the Europe/Middle East/Africa (EMEA) and Asia Pacific regions. On an annual basis, the Americas Office Capital Value Index stands a 6.1% above where it was last year. That index grew, on average, by 150 basis points (bps) a quarter in 2012.
The EMEA Office Capital Value Index stayed steady in the fourth quarter at 112.8. On average, the EMEA index declined 45 bps a quarter in 2012 and is 1.8% lower than a year ago. While the Asia Pacific Office Capital Value Index fell slightly (6 bps) for the first time in 12 quarters, to 217.1, it remained the only regional index to have surpassed its pre-recession peak by 3.5%. Compared to a year ago, the Asia Pacific index improved by 2.1%, with average per quarter growth in 2012 of 51 bps.
The Americas Office Rent Index rose by 1.6% in the fourth quarter and rose 4% relative to the fourth quarter of 2011. In the U.S., technology, energy and healthcare industries have driven leasing demand across the South and West, including energy markets such as Houston; technology markets such as San Francisco, Seattle, and San Jose; and healthcare/biotech markets such as Austin and Boston.
The Asia Pacific's Rent Index experienced an annual drop of 0.3% in 2012. Leasing activity throughout Asia Pacific slowed substantially, with the exception of a select few markets such as Tokyo and Seoul.
The EMEA Office Rent Index also declined slightly for a second consecutive quarter, by 35 bps in the fourth quarter. The EMEA's Rent Index performance is attributed to the weak economic climate amidst the ongoing European sovereign debt challenges.
‘Considering the degree of uncertainty and caution permeating the global economy through the end of 2012, the performance of commercial real estate assets has been resilient,’ says Dr. Raymond Torto, CBRE's global chief economist. "Fundamentals in absorption, occupancies and rents have seen gradual improvements while new supply is scarce, a dynamic which has maintained and improved the leasing market. Strong occupier and investor demand for prime space in the most desirable locations has played a significant role in the ongoing commercial real estate recovery as well.’