Property value and rent growth continued in the Americas, balancing flat performance and modest declines in the EMEA and Asia Pacific markets.
“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. 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,” said Dr. Raymond Torto, CBRE Global Chief Economist.
CBRE Global Capital Value Indices
The CBRE Office Capital Value Index registered 146.1, up 0.6% on the quarter and 1.9% year-over-year. The plateau reached in the Index can be attributed to regional differences with strength in the Americas counterbalanced by weaker performance elsewhere in the world.
The CBRE Capital Index for the Americas (dominated by the US region) noticeably outpaced EMEA and Asia Pacific. 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.
EMEA’s Office Capital Value Index stayed steady in Q4 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 remains the only regional index to have surpassed its pre-recession peak by 3.5%.
CBRE Global Office Rent Indices
The Americas Office Rent Index rose by 1.6% in Q4 and has risen 4.0% relative to Q4 2011. This performance reflects the slow, steady recovery across the region, particularly the US.
In the U.S., technology, energy and healthcare industries have driven leasing demand across the South and West portions of the US, 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 fell for the second consecutive quarter, dropping by  bps in Q4. 2012’s annual drop of 0.3% was the first annual decline since 2010. Leasing activity throughout Asia Pacific slowed substantially; with the exception of a select few markets such as Tokyo and Seoul where large volumes of new supply have prompted occupiers to upgrade to higher quality buildings.
The EMEA Office Rent Index also declined slightly for a second consecutive quarter, by 35 bps in Q4. EMEA’s Rent Index performance is clearly linked to the weak economic climate amidst the ongoing European sovereign debt challenges. While the immediate threat of a Euro zone breakup has subsided underlying structural changes and austerity programs are still to be formalized and implemented.
The CBRE Indices were created by CBRE Research. The Global Office Rent Index is comprised of data from 123 cities around the world. The Global Capital Value Index uses the same sample for EMEA and Asia Pacific, while the Americas data is derived from the National Council of Real Estate Investment Fiduciaries (NCREIF) and is not built up city by city the same way as is the rent index data. The base period for the indices is Q1 2001.