Global office vacancies fall to two-year low: Jones Lang

Global office vacancies dropped to their lowest level in two years, driving rents higher for an eighth straight quarter, a Global Office Index report by Jones Lang LaSalle Inc showed.

Global vacancy edged to 13.6 per cent, Jones Lang LaSalle, the world’s second-biggest publicly traded commercial-property broker, said. Prime office rents have risen for eight straight quarters, climbing 0.8 per cent over the September quarter and 6 per cent from the same period a year ago, according to the report.

Vacancy rates are expected to fall further in the US and Europe in 2012 amid declines in supply of office space, Jones Lang said. By contrast, vacancy levels are expected to rise in China and India this year as office supply is expected to rise to a record, it said.

“The rental outlook for 2012 has been tempered by ongoing economic uncertainty, although we continue to expect positive rental growth in most major prime office markets,” Jeremy Kelly, director at Jones Lang LaSalle’s global research team, said in the report. “While leasing markets in the major financial centers are softening, the limited supply pipeline should ensure that they do not move significantly out of balance.”

Rental growth rose the highest in the Americas at 1.2 per cent in the fourth quarter from the previous quarter, Jones Lang said. In Asia-Pacific markets, growth decelerated to 0.9 per cent in the quarter from 2.5 per cent in the previous three months as corporate demand began to slow, it said. Europe’s office markets showed some improvement in the quarter with rents climbing 0.4 per cent from a virtual halt in the third quarter countering slowing economic growth.

Leasing volumes will be steady this year with positive rental growth expected in most major office markets including Beijing, Toronto and San Francisco, topping the charts with potential double-digit increases, Jones Lang said.