London still most expensive city for office space

London remains the world's most expensive city to rent office space, with average annual occupancy costs of around £1,072 per square metre.

International property consultants Healey & Baker looked at 45 countries around the world, analysing the total costs of occupying office space in 100 locations. The company then compiled a league table of countries, showing the most expensive locations.

London led the list at £1,072 per square metre, while Tokyo retained its second place - at £752 - while Paris moved into third place with a figure of £615.

Other findings from the firm's investigation revealed that average vacancy rates in Europe have increased from 3.75 per cent to 5.4 per cent as difficult economic conditions take their toll on business activity. Switzerland, Sweden and Turkey saw double-digit falls in rental growth while Central and Eastern European markers performed relatively well.

The US saw a marked rise in availability, with Washington DC clearly the best performing office market. New York showed increased letting activity following the terrorist attacks, as displaced tenants sought alternative office accommodation. However, this activity has now slowed as most major occupiers have found new space.

David Hutchings, Head of the European Research Group at Healey & Baker, said: "2001 started with a continuation of the robust activity of the preceding year, but the second half of the year was a different story.

"There are clearly going to be further areas of weakness in the months ahead but there are now some more hopeful signs. If the economy picks up steadily later this year as we expect, a return to balance should be evident in the global office market in 2003, with renewed pressure on rents following as corporate investment increases," he added. (CL)