As Citigroup, the US banking giant, puts half its new Canary Wharf tower in London's Docklands on the rental market, a new survey shows the West End and City are the world's first and second most expensive territories for office space.
According to DTZ, the international property adviser, office rents in London's West End average £1,041 per square metre per year, followed by the City at £892. Next comes central Tokyo at £738, Hong Kong £554 and Paris £533. Midtown New York is 10th on £419. These costs include local property tax and maintenance as well as rent.
Not surprisingly, such cost pressures have led to the UK housing some of the world's most cramped offices, too, DTZ said. While this table is headed by Taiwan with a mere nine square metres per employee and Thailand on 10 square metres, the UK is close behind on 11.2. Even the notoriously crowded Japanese office market gives its workers more room to breathe, at 11.6 square metres. Britain's offices are the most crowded in western Europe, with less than half the space per person enjoyed by German employees.
Elspeth Lochhead, director of DTZ Pieda Consulting, said: "Although prime office space in London is the most expensive in the world, the fact that space is used more efficiently means that, overall, property is not necessarily a larger item on a company's profit-and-loss account than in other major cities. London is Europe's financial capital and continues to attract companies on an almost daily basis because of the unique blend of highly skilled and flexible labour, along with relatively competitive labour costs."
Nevertheless, despite the cramped conditions, the West End is still the world's most expensive in terms of the total occupancy cost per office worker, at £11,010 a year, followed by Boston in Massachusetts on £9,500. Central Tokyo is £8,604.