2016 APAC Fit-out Cost Guide - Occupier Projects

A S I A AS PACIFIC FIT-OUT COST GUIDE Occupier Projects 2016/17 Edition

FOREWORD What is the holistic cost over the lifecycle of the corporate ofce?

Martin Woods Senior Managing Director, Asia Pacifc CBRE Project Management Global Leadership & Platform

The evolution of the Asia Pacic Cost Guide into a more holistic holistic guide was a natural progression from the “how much is it going to cost?” topic covered in 2014, to the “what solution will provide the best value?” focus point point in 2015. 2015. To continue providing our clients with the best integrated service, in the 2016 edition we have addressed commercial ofce lifecycle costing through the modeling and regional comparisons of key common costs across capital expenses, operating expenses and leasing for Grade A buildings. Again, all the indices and tables provided are the result of analysis of empirical data from CBRE assignments covering the three major cost elements. As always, we are looking at ways ways to further improve this guide and provide you, the client, with the most relevant data to guide your real estate decisions so please let us have your feedback.

CBRE TOKYO OFFICE CBRE PROJECT MANAGEMENT

CONTENTS INTRODUCTION

5

2016 APAC FIT-OUT COST INDEX

7

FIT-OUT COST BENCHMARKI NG TABLE

8

FIT-OUT COST TREND FROM 2014 TO 2016

11

LEASING

14

TYPICAL LEASE PERIOD

16

FACILITIES MANAGEMENT COST

18

NET PRESENT LIFECYCLE COSTING

22

ACTIVITY-BASED WORKING: FM COST CONSIDERATIONS

Disclaimer: CBRE Ltd has taken every care in the preparation of this document. The sources of information used are believed to be accurate and reliable, but no guarantee of accuracy or completeness can be given. The cost estimation are intended to be guides only. Please contact our market leaders, provided within this document or available from our cbre.com website, who can provide an accurate cost estimate based on your specic requirements. Neither CBRE, nor any director, representative or employee of CBRE company, accepts liability for any direct or consequential loss arising from the use of this document. The information and opinions contained in this document are subject to change without notice. No part or parts of this document may be stored in a retrieval system or reproduced or transmitted in reprographics, recording or otherwise, now known or to be devised without prior consent from CBRE.

28

REGIONAL FIT-OUT COST ANALYSIS

30

2016 GLOBAL FIT-OUT COST INDEX

44

1

CONTENTS INTRODUCTION

5


7

FIT-OUT COST BENCHMARKI NG TABLE

8

FIT-OUT COST TREND FROM 2014 TO 2016

11

LEASING

14

TYPICAL LEASE PERIOD

16


18


22

ACTIVITY-BASED WORKING: FM COST CONSIDERATIONS

28


30

2016 GLOBAL FIT-OUT COST INDEX

44

Disclaimer: CBRE Ltd has taken every care in the preparation of this document. The sources of information used are believed to be accurate and reliable, but no guarantee of accuracy or completeness can be given. The cost estimation are intended to be guides only. Please contact our market leaders, provided within this document or available from our cbre.com website, who can provide an accurate cost estimate based on your specic requirements. Neither CBRE, nor any director, representative or employee of CBRE company, accepts liability for any direct or consequential loss arising from the use of this document. The information and opinions contained in this document are subject to change without notice. No part or parts of this document may be stored in a retrieval system or reproduced or transmitted in reprographics, recording or otherwise, now known or to be devised without prior consent from CBRE.

2

CBRE PROJECT MANAGEMENT

ASIA PACIFIC FIT-OUT COST GUIDE

MACRO-ECONOMIC FACTORS

INTRODUCTION

Driving Dramatic Shifts Currency Volatility

Ination

2015-2017 2013-2015

-5.1% -5%

Australia

-29% 1.7%

-24% -11.1%

Japan

-0.8%

-17%

New Zealand

-6.5%

Thailand

-11% -2.7%

Singapore

-10% -4.5%

0.25% 1.78% 2.74% 2.66%

-2.6%

-7% -7%

Philippines

-4.3%

Taiwan

-3.6% -4% -6.4% -6.2%

0.87% 0.76% 1.29% 0.49% 0.49% 0.25% 5.37% 5.94%

India

-10%

Vietnam South Korea

-3%

China

-2% 0.0%

0%

Hong Kong

6.58%

2.01% 2.02%

Malaysia

-24%

Source: CBRE Asia Pacic Research Jun 2016

4.05%

Indonesia

-29%

2.67% 2.82%

Lifecycle costing guides businesses to make the most informed decision for their Real Estate investment strategy

2014 Fit-out Cost

As part of CBRE’s commitment to delivering advantage for all of our clients, we are delighted to present the third installment of CBRE’s Asia Pacic Cost Guide. The 2016 edition provides industry professionals with a point of reference for capital costs, operational expenditure, and leasing costs to make more informed decisions on real estate strategy. CBRE has gathered data and solicited feedback from a cross-section of clients to derive information that will affect today’s commercial real estate decisions To further develop the APAC Fit-Out Cost Guide we have tried to take a broader view which has enabled us to assess the cost of the facility through to the end of its lifecycle. We have termed this Net Present Lifecycle Costing and used the data obtained to create a Net Present Lifecycle Cost Index.

1.25% 0.44%

2016 Lifecycle Costing

Guide Assumptions • The commercial tower is a Grade A of ce building within the Central Business District with the following characteristics: - A modern, exible, column-free footprint of atleast 15,000 square feet - Total oor area of at least 300,000 square feet - Shelt ered parking GFA ratio of 1/2000 - Accessibility to public transport • Commercial ofce assumptions: - Ofce size between 25,000 to 30,000 square feet. - Density range of 1 workstation to 90 to 110 square feet - Fixed 1-1 desk ratio • Fit-out costs include: - Consultants fees - Builders works - M&E works - Standard ofce FF&E - Structured cabling • Exclusions: - Telephony/IT/AV/Security equipment - Considerat ion for building abnormalities or variances such as onerous landlord requirements

Additional Guide Assumptions for FM Costs

2.85% 2.82% 1.47% 1.00% 2.26% 1.73% 2.30% 3.81%

As currencies in APAC generally continue to slide against the USD at rates at least equal to, or greater than, domestic ination, a pattern of falling cost would appear when reported in USD in all locations except Hong Kong (see Cost Trend, page 11). The cost of construction in local curre ncies however are showing gradual increase and need to be considered against revenue generated in the local market when making commerci al ofce investment decisions. Pipeline projects should be identied considering lease expiry and changes in headcount, as well as macro and micro economic factors.

2015 Fit-out, Leasing & ABW options

Zac Zdravev Senior Director, Asia Pacifc CBRE Project Management Global Leadership & Platform

• Facility Management costs include: - Cleaning - Mechanical & Electrical Maintenance - Security Services - Utilities - Pest control - Mailroom - Reception - Landscaping - Condential waste disposal • Exclusions: - Dedicate d Chiller and Generator maintenance - Property Tax - Management Fee

3

MACRO-ECONOMIC FACTORS

INTRODUCTION Lifecycle costing guides businesses to make the most informed decision for their Real Estate investment strategy

Driving Dramatic Shifts Currency Volatility

Ination

2015-2017 2013-2015

-5.1%

4.05%

Indonesia

-29% -5% -29% 1.7%

-24% -11.1%

2.74% 2.66%

Malaysia -0.8%

-17%

1.29% 0.49%

Thailand

-11% -2.7% -4.5% -2.6%

-7%

1.25% 0.44%

Taiwan

-3.6% -4%

2.26% 1.73%

China

-2% 0.0%

2.30% 3.81%

Hong Kong

0%

Source: CBRE Asia Pacic Research Jun 2016

As currencies in APAC generally continue to slide against the USD at rates at least equal to, or greater than, domestic ination, a pattern of falling cost would appear when reported in USD in all locations except Hong Kong (see Cost Trend, page 11). The cost of construction in local curre ncies however are showing gradual increase and need to be considered against revenue generated in the local market when making commerci al ofce investment decisions. Pipeline projects should be identied considering lease expiry and changes in headcount, as well as macro and micro economic factors.

4

Guide Assumptions • The commercial tower is a Grade A of ce building within the Central Business District with the following characteristics: - A modern, exible, column-free footprint of atleast 15,000 square feet - Total oor area of at least 300,000 square feet - Shelt ered parking GFA ratio of 1/2000 - Accessibility to public transport • Commercial ofce assumptions: - Ofce size between 25,000 to 30,000 square feet. - Density range of 1 workstation to 90 to 110 square feet - Fixed 1-1 desk ratio • Fit-out costs include: - Consultants fees - Builders works - M&E works - Standard ofce FF&E - Structured cabling • Exclusions: - Telephony/IT/AV/Security equipment - Considerat ion for building abnormalities or variances such as onerous landlord requirements

• Facility Management costs include: - Cleaning - Mechanical & Electrical Maintenance - Security Services - Utilities - Pest control - Mailroom - Reception - Landscaping - Condential waste disposal • Exclusions: - Dedicate d Chiller and Generator maintenance - Property Tax - Management Fee

1.47% 1.00%

South Korea

Zac Zdravev Senior Director, Asia Pacifc CBRE Project Management Global Leadership & Platform



HISTORIC FIT-OUT COST INDEX

2016 APAC FIT-OUT COST INDEX Hong Kong

Tokyo Hyderabad

Sydney

1.27

Hyderabad

Bangalore

1.27

1.22 0.49 0.56

1.12

1.20

Bangalore

Despite the continued decline of JPY, award of the 2020 Tokyo Olympics buoyed the market and inspired confidence in the construction industry.

Hong Kong

Mumbai

Tokyo 0.52

0.76

1.07

Taipei 0.88

Manila

1.00

1.00

Jakarta

0.62

Jakarta

1.12

Perth

0.77

Guangzhou

1.04 0.98

1.17

0.56

Riding the high demand for commodities from China, the AUD continued to perform well against the USD.

1.11 Singapore

0.87

2014 Cost Index

Sydney 1.18

0.60

HCMC

Seoul

1.23

Seoul

Mumbai

2016 Lifecycle Costing

Additional Guide Assumptions for FM Costs

2.85% 2.82%

Vietnam

-3%

-6.2%

2.67% 2.82%

Philippines

-4.3%

-6.4%

5.37% 5.94%

India

-10%

To further develop the APAC Fit-Out Cost Guide we have tried to take a broader view which has enabled us to assess the cost of the facility through to the end of its lifecycle. We have termed this Net Present Lifecycle Costing and used the data obtained to create a Net Present Lifecycle Cost Index.

0.49% 0.25%

Singapore

-10%

-7%

0.87% 0.76%

New Zealand

-6.5%

6.58%

0.25% 1.78%

Japan

-24%

As part of CBRE’s commitment to delivering advantage for all of our clients, we are delighted to present the third installment of CBRE’s Asia Pacic Cost Guide. The 2016 edition provides industry professionals with a point of reference for capital costs, operational expenditure, and leasing costs to make more informed decisions on real estate strategy. CBRE has gathered data and solicited feedback from a cross-section of clients to derive information that will affect today’s commercial real estate decisions

2.01% 2.02%

Australia

2015 Fit-out, Leasing & ABW options

2014 Fit-out Cost

HCMC

1.06

0.78

Auckland

Beijing

Kuala Lumpur 0.82

Shanghai

1.04

Taipei

Beijing

Seoul Hyderabad

Hong Kong

1.21

0.82

1.13

Bangalore

1.00

Beijing

Bangkok

1.02

JPY hit a five-year lowin June 2015.

0.49

Mumbai

Tokyo

0.54

0.98

1.01

0.86

0.59

AUD slide against the USD started in 2H 2014 & continued to drop until end of 2015.

HCMC

Shanghai 0.83

Manila 1.01

0.75

Kuala Lumpur 0.75

1.00

Jakarta 0.81

Taipei

0.96

Singapore Brisbane

Shanghai

Melbourne

0.98 0.95

Sydney

Guangzhou

0.98 0.83 0.83

Bangkok

Guangzhou

0.89 0.87

Singapore Manila

Kuala Lumpur

Apart from some notable exceptions in ination rates, foreign exchange volatility is still the main factor driving the dramatic shifts in the Asia Pacic Index. The index data is generated through the use of CBRE’s Project Management platform used for projects across Asia Pacic.

2015 Cost Index Disclaimer:

This graph shows the capital expense mult iplier for the design and construction of t he same ofce project across Asia Pacic using Shanghai as the un it index. This index should be used as a guide only, for actual project budget estimates please contact the CBRE Project Management Division Lead in your city.

6



7

5

HISTORIC FIT-OUT COST INDEX

Hong Kong

Tokyo Hyderabad


Sydney

1.27

Hyderabad 1.27

Seoul

Bangalore 0.49 0.56

1.12

1.20

Bangalore

1.22

Mumbai

Despite the continued decline of JPY, award of the 2020 Tokyo Olympics buoyed the market and inspired confidence in the construction industry.

Hong Kong

Mumbai

Tokyo 0.52

0.76

1.07

Taipei 0.88 0.98 1.00

1.00

Jakarta

0.62

Jakarta

1.12

Perth

0.77

Guangzhou

1.04

Manila

1.17

0.56

Riding the high demand for commodities from China, the AUD continued to perform well against the USD.

1.11 Singapore

0.87

2014 Cost Index

Sydney 1.18

0.60

HCMC

Seoul

1.23

HCMC

1.06

0.78

Auckland

Beijing

Kuala Lumpur 0.82

Shanghai

1.04

Taipei

Beijing

Seoul Hyderabad

Hong Kong

1.21

0.82

1.13

Bangalore

1.00

Beijing

Bangkok

1.02

JPY hit a five-year lowin June 2015.

0.49

Mumbai

Tokyo

0.54

0.98

1.01

0.86

0.59

AUD slide against the USD started in 2H 2014 & continued to drop until end of 2015.

HCMC

Shanghai 0.83

Manila 1.01

0.75

Kuala Lumpur 0.75

1.00

Jakarta 0.81

Taipei

0.96

Singapore Brisbane

Shanghai

Melbourne

0.98 0.95

Sydney

Guangzhou

0.98 0.83 0.83

Bangkok

Guangzhou

0.89 0.87

Singapore Manila

Kuala Lumpur

Apart from some notable exceptions in ination rates, foreign exchange volatility is still the main factor driving the dramatic shifts in the Asia Pacic Index. The index data is generated through the use of CBRE’s Project Management platform used for projects across Asia Pacic.

2015 Cost Index Disclaimer:

This graph shows the capital expense mult iplier for the design and construction of t he same ofce project across Asia Pacic using Shanghai as the un it index. This index should be used as a guide only, for actual project budget estimates please contact the CBRE Project Management Division Lead in your city.

6



7

CBRE PROJECT MANAGEMENT CBRE PROJECT MANAGEMENT

99

FIT-OUT COST BENCHMARKING TABLE

8

ASIA PACIFIC PACIFIC FIT -OUT COST ASIA FIT-OUT COST GUIDE GUIDE


8



FIT-OUT COST BENCHMARKING TABLE BASIC

MEDIUM

99

FIT-OUT COST TREND FROM 2014 TO 2016 The graph below represents a blended average for each location.

HIGH

160

Region North Asia

City

US$/sq.ft

US$/sq.ft

US$/sq.ft

South Korea

Seoul

91

128

166

12 44

Japan

Greater China

South East Asia

Reinstatement US$/sq.ft

Country

China

Pacic

Tokyo

84

126

168

Beijing

75

105

156

13

Shanghai

71

100

152

12

Guangzhou

65

96

148

11

Taiwan

Taipei

65

86

113

11

Hong Kong

Hong Kong

84

125

200

23

Sydney

85

115

180

17

Melbourne

73

103

141

14

Perth

78

113

171

14

North Asia

Greater China

Pacific

100

80

Australia Brisbane

70

100

135

14

New Zealand

Auckland

65

114

163

15

Philippines

Manila

50

89

129

9

Vietnam

HCMC

61

84

105

3

Indonesia

Jakarta

57

81

110

5 14

Malaysia

Kuala Lumpur

64

87

125

Singapore

Singapore

80

109

127

14

Thailand

Bangkok

46

84

134

10

Mumbai

47

66

85

2

Hyderabad/Kolkata/Pune

40

55

70

2

Bangalore/Chennai/Delhi

43

60

78

2

India

Please note that the cost data only includes Consultancy fees, Builder Works, M&E works and Fixed Furniture and Equipment (FF&E) and should only serve as a guide reference across the region. This is not meant to be a budget document and CBRE Project Management Division Leads in each market should be approached to support on project specic budget estimates. Typical reinstatement rates for ofces may vary to different degrees depending on the reinstatement requirement.

10

South Asia

120

60

40

l i i i e d d r i u p e e e e t l a k k e y r h o o b a M C a r t a b a a o u k y o o n g i i n g h a z l r i l a n u r n b a n p o r m p u a n h o a d n P e k g H C a k K B e j a n g g S e T o g a L u T u m n g d e r a i s S y M B a n u c e b o B r g J n l h M a n n A a y i S B H l a S a M H o G u u K 2014

South Asia

South East Asia

140


2015

2016

In Pacic, why the rebound in cost per square foot in 2016? 1. Smaller leasing deals resulting in density changes and increasing services costs by unit of area. 2. Old stock - buildings requiring more CAPEX to perform the way the t-outs require.

JESS SURMAN Director, CBRE Project Management Perth, Western Australia

Various cost trends have formed following the analysis of empirical data gathered from completed projects managed by CBRE. Inflation, currency volatility and unique in-location market conditions each had a different degree of impact on the fit-out rates. Royston Toh Senior Manager, Asia Pacifc CBRE Project Management Global Leadership & Platform


11


FIT-OUT COST TREND FROM 2014 TO 2016 The graph below represents a blended average for each location.

BASIC

MEDIUM

HIGH

Country

City

US$/sq.ft

US$/sq.ft

US$/sq.ft

South Korea

Seoul

91

128

166

12 44

160

Region North Asia

Japan

China

Greater China

Reinstatement US$/sq.ft

Tokyo

84

126

168

Beijing

75

105

156

13

Shanghai

71

100

152

12

Guangzhou

65

96

148

11

Taiwan

Taipei

65

86

113

11

Hong Kong

Hong Kong

84

125

200

23 17

Sydney

85

115

180

Melbourne

73

103

141

14

Perth

78

113

171

14

North Asia

Pacific

Greater China

South Asia

120

100

80

Australia

Pacic

Brisbane

70

100

135

14

New Zealand

Auckland

65

114

163

15

Philippines

Manila

50

89

129

9

Vietnam

HCMC

61

84

105

3

Indonesia

Jakarta

57

81

110

5

Malaysia

Kuala Lumpur

64

87

125

14

Singapore

Singapore

80

109

127

14

Thailand

Bangkok

46

84

134

10

Mumbai

47

66

85

2

Hyderabad/Kolkata/Pune

40

55

70

2

Bangalore/Chennai/Delhi

43

60

78

2

South East Asia

60

40

l i i i r i y C u h e e o n g n g a r e a d l a k k n d r e o M a r t a b a a o u k y i h z l o a b i p e d n e P e r t k j l a u r n b a n p o m p u a n h o a i g H C a k K o B e r S e T o g n g g a T u m g i s u S y M B a n u c e b o B r J l h a u a n M B a n y d e n A i n g l a L S o S H M H a G u K 2014

South Asia

India

Typical reinstatement rates for ofces may vary to different degrees depending on the reinstatement requirement.


2015

2016

In Pacic, why the rebound in cost per square foot in 2016? 1. Smaller leasing deals resulting in density changes and increasing services costs by unit of area. 2. Old stock - buildings requiring more CAPEX to perform the way the t-outs require.

JESS SURMAN Director, CBRE Project Management Perth, Western Australia

Various cost trends have formed following the analysis of empirical data gathered from completed projects managed by CBRE. Inflation, currency volatility and unique in-location market conditions each had a different degree of impact on the fit-out rates.

Please note that the cost data only includes Consultancy fees, Builder Works, M&E works and Fixed Furniture and Equipment (FF&E) and should only serve as a guide reference across the region. This is not meant to be a budget document and CBRE Project Management Division Leads in each market should be approached to support on project specic budget estimates.

10

South East Asia

140

Royston Toh Senior Manager, Asia Pacifc CBRE Project Management Global Leadership & Platform


11


13

PROJECT STANDARD MATRIX PROJECT STANDARD Description of items

PROJECTSTANDARD Basic

Medium

High

Description of items

BASIC OFFICE FUNCTIONALITY

SYSTEM FURNITURE

Elaborate Pantry and Breakout Areas

Flexibility in Workspace Churn & Expansion

Basic Pantry t-out

Powerhoop as an Uninterrupted Footprint Division

Very open ofce layout M&E Redundancy

N+1

2N

High

Simplicity with reduced kit-of-parts Unied look and combined usage

Integrated A/V and lighting control

Cable trough and various cable outlet application TASK CHAIRS

Projector & Audio/Telephone

Asymmetrical lumbar support system

Tables and Chairs only

Pelvic support

SECURITY

4-D arms and seat pan adjustments

Min. 3 levels of security

Upright back lock

1 level of security

Supportive Mesh with tension zones

No electronic security

Synchronized tilt mechanism

WALL & PARTITIONS

Medium

Resolved Design & Seamless Connectivity N

MEETING ROOMS

Basic A/V

Basic

Supportive Mesh with optional upholstery back

Plasterboard with fabric nish / to slab with high acoustic rating) Double glazed partition Single glazed partition Plasterboard walls FLOOR FINISHES

Marble/Stone Slab Finishes Carpet Tile Vinyl Sheets or basic concrete screed nishes

12


PROJECT STANDARD MATRIX PROJECT STANDARD Description of items

PROJECTSTANDARD Basic

Medium

High

Description of items

Basic

BASIC OFFICE FUNCTIONALITY

SYSTEM FURNITURE

Elaborate Pantry and Breakout Areas

Flexibility in Workspace Churn & Expansion

Basic Pantry t-out

Powerhoop as an Uninterrupted Footprint Division

Very open ofce layout

Medium

High

Resolved Design & Seamless Connectivity

M&E Redundancy

N

N+1

2N

Simplicity with reduced kit-of-parts

MEETING ROOMS

Unied look and combined usage

Integrated A/V and lighting control

Cable trough and various cable outlet application

Basic A/V

TASK CHAIRS

Projector & Audio/Telephone

Asymmetrical lumbar support system

Tables and Chairs only

Pelvic support

SECURITY

4-D arms and seat pan adjustments

Min. 3 levels of security

Upright back lock

1 level of security

Supportive Mesh with tension zones

No electronic security

Synchronized tilt mechanism Supportive Mesh with optional upholstery back

WALL & PARTITIONS

Plasterboard with fabric nish / to slab with high acoustic rating) Double glazed partition Single glazed partition Plasterboard walls FLOOR FINISHES

Marble/Stone Slab Finishes Carpet Tile Vinyl Sheets or basic concrete screed nishes

12



13


15

LEASING The graph below provides the leasing costs per sq ft in USD for Prime and Grade A building in each market. Hong Kong

Leasing wheel – Prime Rent

Manila

Beijing

257

Bangkok

Tokyo 174

Bangalore

Shanghai

148

Auckland

Melbourne

31

106

Singapore

92

39 39

81

45 47 57

Gurgaon

Delhi

118

31 33 35

78 59 62 62

Mumbai

71

Perth

Sydney

Brisbane

Seoul Taipei

HCMC Jakarta

Guangzhou

Beijing

Leasing wheel – Grade A

Hyderabad

Tokyo

117

116

Kuala Lumpur

Hong Kong 99

CBRE ORLANDO OFFICE

Manila

Singapore 85

Bangalore

While headline rental rates remain a critical component for any office user, we are witnessing an increased emphasis placed on a more holistic understanding of occupancy factors including how location, fit-out, FM cost and workplace program can support and drive corporate objectives.

Shanghai 20 24

Gurgaon

70

Auckland

63

30 43

38 39 40 41

Seoul

42

Melbourne

Brisbane

Sydney

Taipei

Guangzhou

Jakarta Perth


Mumbai

53

35 39

14

Delhi

27 27 29

Bangkok

Manish Kashyap Regional Managing Director, Asia Pacifc Brokerage

85 11

HCMC

LEASING The graph below provides the leasing costs per sq ft in USD for Prime and Grade A building in each market. Hong Kong

Leasing wheel – Prime Rent

Manila

Beijing

257

Bangkok

Tokyo 174

Bangalore

Shanghai

148

Auckland

Melbourne

31

106

Singapore

92

39 39

81

45 47 57

Gurgaon

Delhi

118

31 33 35

78 59 62 62

Mumbai

71

Perth

Sydney

Brisbane

Seoul Taipei

HCMC Jakarta

Guangzhou

Beijing

Leasing wheel – Grade A

Hyderabad

Tokyo

117

116

Kuala Lumpur

Hong Kong 99

CBRE ORLANDO OFFICE

Manila

Singapore 85

Bangalore

While headline rental rates remain a critical component for any office user, we are witnessing an increased emphasis placed on a more holistic understanding of occupancy factors including how location, fit-out, FM cost and workplace program can support and drive corporate objectives.

Shanghai 20 24

Gurgaon

70

29

Auckland

63

30

Mumbai

53

35

43

38 39

39 40 41

Seoul

42

Melbourne

Brisbane

Sydney

Taipei

Guangzhou

Jakarta Perth

14

Delhi

27 27

Bangkok

Manish Kashyap Regional Managing Director, Asia Pacifc Brokerage

85 11

HCMC CBRE PROJECT MANAGEMENT


15

TYPICAL LEASE PERIOD The Asia Pacic geographical map represents the typical lease period by location. The periods are further categorized into 3 main groups namely 3-year lease, 5 to 6-year lease and 8 to 9-year lease. Each period must be carefully considered by corporate clients when they are deciding to enter a new market, looking for a new lease space or renewing their existing lease terms.

NEW DELHI

TOKYO

HYDERABAD

SEOUL

MUMBAI

BEIJING

CHENNAI

SHANGHAI TAIPEI

BANGALORE

GUANGZHOU BANGKOK HONG KONG KUALA LUMPUR

Markets such as the Pacific region tend to have longer lease terms whereas most markets in Asia have terms ranging from 3 to 5 years. This is primarily due to greater market volatility in Asia with landlords taking advantage of rental cycles. More recently there has been a trend for occupiers to secure longer lease periods, especially for larger build-to-suit or special use facilities where lease terms of 5 to 9 years can be achieved.

MANILA SINGAPORE HCMC JAKARTA BRISBANE PERTH SYDNEY

AUCKLAND

MELBOURNE

3 YEARS LEASE BEIJING SHANGHAI GUANGZHOU HONG KONG

16

HCMC JAKARTA KUALA LUMPUR BANGKOK


5-6 YEARS LEASE SEOUL TOKYO TAIPEI HYDERABAD

MANILA SINGAPORE PERTH BRISBANE MUMBAI

8-9 YEARS LEASE NEW DELHI BANGALORE CHENNAI SYDNEY

MELBOURNE AUCKLAND


17

TYPICAL LEASE PERIOD The Asia Pacic geographical map represents the typical lease period by location. The periods are further categorized into 3 main groups namely 3-year lease, 5 to 6-year lease and 8 to 9-year lease. Each period must be carefully considered by corporate clients when they are deciding to enter a new market, looking for a new lease space or renewing their existing lease terms.

NEW DELHI

TOKYO

HYDERABAD

SEOUL

MUMBAI

BEIJING

CHENNAI

SHANGHAI TAIPEI

BANGALORE

GUANGZHOU BANGKOK HONG KONG KUALA LUMPUR

Markets such as the Pacific region tend to have longer lease terms whereas most markets in Asia have terms ranging from 3 to 5 years. This is primarily due to greater market volatility in Asia with landlords taking advantage of rental cycles. More recently there has been a trend for occupiers to secure longer lease periods, especially for larger build-to-suit or special use facilities where lease terms of 5 to 9 years can be achieved.

MANILA SINGAPORE HCMC JAKARTA BRISBANE PERTH SYDNEY

AUCKLAND

MELBOURNE

3 YEARS LEASE BEIJING SHANGHAI GUANGZHOU HONG KONG

16

HCMC JAKARTA KUALA LUMPUR BANGKOK



18


5-6 YEARS LEASE SEOUL TOKYO TAIPEI HYDERABAD

MANILA SINGAPORE PERTH BRISBANE MUMBAI

8-9 YEARS LEASE NEW DELHI BANGALORE CHENNAI SYDNEY

MELBOURNE AUCKLAND


17

CBRE MADRID OFFICE


19

CBRE MADRID OFFICE


18




The graph below indicates the unit rates per sqft in USD for various components annually. Rates in different locations are directly affected by the labor market condition and local tariff rates. CLEANING

The operating cost of a corporate ofce is dened as the Facilities Management (FM) cost in this document. The FM cost shall be

classied into 9 key components namely, waste, landscaping and reception. Depending cleaning, M&E maintenance, pest control, on the facility, the cost may differ on the nal security services, utilities, mailroom, condential service standard adopted by the client.

Sydney Singapore

Auckland

SECURITY SERVICES

LANDSCAPING

MAIL ROOM

PESTS CONTROL

RECEPTION

Brisbane

1.0 .088

M EC HA NI CA L &

UTILITIES

ELECTRICAL MAINTENANCE

Guide Assumptions for FM cost • The commercial tower is a Grade A ofce building within the

Hong Kong

1.3 .31 1

Taipei

1.3 .355

Beijing

1.1 .111

Shanghai

1.0 .077

Guangzhou

0.9 .966

Jakarta

Central Business District with the following characteristics: - A modern, exible, column-free footprint of at least 15,000 square feet - Total oor area of at least 300,000 squarefeet • Commercial ofce assumptions: - Ofce size between 25,000 to 30,000 square feet. - Density range of 1 workstation to 90 to 110 square feet - Fixed 1-1 desk ratio


-

Security Services Utilities Pest control Mailroom Reception Landscaping Condential waste disposal

• Exclusions: - Dedicated Chiller and generator maintenance

- Property Tax - Management fee

1.4 .44

1.5 .55

0.3 .39

Manila

0.922 0.8 .86 6

Bangalore

0.7 .78 8

Hyderabad

0.722

1.4 .44

0.8 .87 7

0.97 7 1.044 1.0 .04 4

0.3 .31

0.8 .866 0.400

0.40 0 0.4 .455 0.4 .41 1 0.388

1.00

0.8 .86 6

0.9 .966

0.6 .655 0.6 .655 0.6 .68

0.72 2 0.72 2 0.7 .766

2.00

1.4 .45 5

1.7 .79

1.3 .39 9

1.6 .62

0.511 0.6 .66 6

0.7 .755 0.6 .699 0.6 .633

3.00

0.8 .899

1.8 .87 7

0.7 .766

0.7 .78 8

7.6 .622 7.5 .566 7.4 .488

6.9 .966

0.8 .800 1.3 .300

0.88 8

0.8 .855

0.7 .72 2

1.2 .25 1.4 .40 0

1.9 .922 0.9 .966

7.8 .811

1.499

1.1 .166

0.9 .96 6 0.8 .86 6

8.1 .166

0.9 .988

2.0 .077

0.9 .966

8.5 .55 8.3 .35

1.2 .29 9 1.4 .45 5

1.0 .088

0.8 .866

8.744

1.4 .45 5

1.6 .644

1.1 .166

1.1 .111

1.13 3

Mumbai

1.4 .488

1.3 .300

9.1 .17 7 9.0 .07 7

0.8 .844

1.3 .344

1.800 1.8 .800

1.3 .333

0.8 .83 3 0.7 .755

0.8 .87 7

1.8 .877

1.6 .622

0.3 .39 9

1.5 .555

2.0 .022

1.7 .722 1.72 2

0.8 .88

1.5 .500 1.9 .92

1.6 .600

9.266

1.2 .23 3

2.0 .099 1.8 .800

1.5 .555

0.7 .733

1.2 .255

0.00

• Facility Management costs include: - Cleaning - Mechanical & Electrical Maintenance

0.8 .81 1

9.7 .75 5

1.611

2.0 .033

1.7 .72 1.6 .622

0.7 .755

Seoul

Bangkok

C ON FI DE NT IA L W AS TE

1.2 .211 1.1 .12 2

UTILITIES

2.25 5

1.6 .64 4

1.5 .555 0.5 .58

M&E

1.8 .800 1.4 .48 8

0.8 .844 2.1 .111

LANDSCAPING

CONFIDENTIAL WASTE

1.622 1.05 5

1.2 .255

PESTS CONTROL

RECEPTION

0.9 .91 1

1.622

Melbourne

Kuala Lumpur

20

1.3 .34 4

Tokyo

CL EANING

SECURITY SERVICES

MAILROOM

Perth

Key Components

19

6.8 .877

6.388

4.8 .86 4.6 .67 7

4.3 .39 4.1 .13 3 3.9 .97

4.00

5.00

6.00

7.00

8.00

9.00

10.00

FM Industry professionals would concur that benchmarking spend across markets and industries is a challenging exercise due to the numerous variables included within the spend categories. However, what it does allow us to do is to identify anomalies and question further the operating expenses we manage. Cameron Ahrens Executive Director, Asia Pacifc CBRE Enterprise Facilities Management


21


The graph below indicates the unit rates per sqft in USD for various components annually. Rates in different locations are directly affected by the labor market condition and local tariff rates. CLEANING

The operating cost of a corporate ofce is dened as the Facilities Management (FM) cost in this document. The FM cost shall be

classied into 9 key components namely, waste, landscaping and reception. Depending cleaning, M&E maintenance, pest control, on the facility, the cost may differ on the nal security services, utilities, mailroom, condential service standard adopted by the client.

Sydney

CL EANING

SECURITY SERVICES

LANDSCAPING

MAIL ROOM

PESTS CONTROL

RECEPTION

Brisbane

1.0 .088

M EC HA NI CA L &

UTILITIES

ELECTRICAL MAINTENANCE

Guide Assumptions for FM cost • The commercial tower is a Grade A ofce building within the

Central Business District with the following characteristics: - A modern, exible, column-free footprint of at least 15,000 square feet - Total oor area of at least 300,000 squarefeet • Commercial ofce assumptions: - Ofce size between 25,000 to 30,000 square feet. - Density range of 1 workstation to 90 to 110 square feet - Fixed 1-1 desk ratio

Hong Kong

1.3 .31 1

Taipei

1.3 .355

Beijing

1.1 .111

Shanghai

1.0 .077

Guangzhou

0.9 .966

Jakarta

-

Security Services Utilities Pest control Mailroom Reception Landscaping Condential waste disposal


• Exclusions: - Dedicated Chiller and generator maintenance

- Property Tax - Management fee

1.4 .44

1.5 .55

0.3 .39

Manila

0.922 0.8 .86 6

Bangalore

0.7 .78 8

Hyderabad

0.722

1.4 .44

0.8 .87 7

0.97 7 1.044 1.0 .04 4

0.3 .31

0.8 .866 0.400

0.40 0 0.4 .455 0.4 .41 1 0.388

1.00

0.8 .86 6

0.9 .966

0.6 .655 0.6 .655 0.6 .68

0.72 2 0.72 2 0.7 .766

1.4 .45 5

1.7 .79

1.3 .39 9

1.6 .62

2.00

0.511 0.6 .66 6

0.7 .755 0.6 .699 0.6 .633

3.00

0.8 .899

1.8 .87 7

0.7 .766

0.7 .78 8

7.6 .622 7.5 .566 7.4 .488

6.9 .966

0.8 .800 1.3 .300

0.88 8

0.8 .855

0.7 .72 2

1.2 .25 1.4 .40 0

1.9 .922 0.9 .966

7.8 .811

1.499

1.1 .166

0.9 .96 6 0.8 .86 6

8.1 .166

0.9 .988

2.0 .077

0.9 .966

8.5 .55 8.3 .35

1.2 .29 9 1.4 .45 5

1.0 .088

0.8 .866

8.744

1.4 .45 5

1.6 .644

1.1 .166

1.1 .111

1.13 3

Mumbai

1.4 .488

1.3 .300

9.1 .17 7 9.0 .07 7

0.8 .844

1.3 .344

1.800 1.8 .800

1.3 .333

0.8 .83 3 0.7 .755

0.8 .87 7

1.8 .877

1.6 .622

0.3 .39 9

1.5 .555

2.0 .022

1.7 .722 1.72 2

0.8 .88

1.5 .500 1.9 .92

1.6 .600

9.266

1.2 .23 3

2.0 .099 1.8 .800

1.5 .555

0.7 .733

1.2 .255

0.00

• Facility Management costs include: - Cleaning - Mechanical & Electrical Maintenance

0.8 .81 1

9.7 .75 5

1.611

2.0 .033

1.7 .72 1.6 .622

0.7 .755

Seoul

Bangkok

C ON FI DE NT IA L W AS TE

1.2 .211 1.1 .12 2

UTILITIES

2.25 5

1.6 .64 4

1.5 .555 0.5 .58

M&E

1.8 .800 1.4 .48 8

0.8 .844 2.1 .111

Melbourne

Kuala Lumpur

1.05 5

LANDSCAPING

CONFIDENTIAL WASTE

1.622

1.622 1.2 .255

PESTS CONTROL

RECEPTION

0.9 .91 1

Tokyo Auckland

20

1.3 .34 4

Singapore Perth

Key Components

SECURITY SERVICES

MAILROOM

6.8 .877

6.388

4.8 .86 4.6 .67 7

4.3 .39 4.1 .13 3 3.9 .97

4.00

5.00

6.00

7.00

8.00

9.00

10.00

FM Industry professionals would concur that benchmarking spend across markets and industries is a challenging exercise due to the numerous variables included within the spend categories. However, what it does allow us to do is to identify anomalies and question further the operating expenses we manage. Cameron Ahrens Executive Director, Asia Pacifc CBRE Enterprise Facilities Management


21

CBRE TOKYO OFFICE


22



23 23

CBRE TOKYO OFFICE


22



23 23

NET PRESENT LIFECYCLE COSTING The CBRE termed Net Present Lifecycle Costing (NPLCC) is an index that assumes a typical 5 year i nvestment time frame and not necessarily the lease period. NPLCC is a guide that benchmarks potential capital and operating expenses across the region over the investment period brought forward to present value. NPLCC provides holistic cost data to clients, enabling informed decisions and guides real estate strategies. FIT-OUT COST

Tokyo

LEASING COST

$126

Beijing

REINSTATEMENT

$484

$105

Hong Kong

FM COST

$38 $33

$488

$125

FIT-OUT COST

NPLCC (USD/Sqft) 673

15%

10%

38%

Shanghai

$109 $100

Seoul

$128

Delhi

$60

Mumbai

$66

$221

$263 $158

$42

327

Perth

$113

$163

$40

325

$36

325

Taipei

$86

Guangzhou Melbourne Jakarta

$96

$163

$103

$146

$81

Auckland

$84

Manila

$89

Kuala Lumpur

301

$30

297

$37

286

$37

$121

237

$20

216

$28

207

Bangalore

$60

$113

$19

193

Gurgaon

$60

$113

$19

193

Hyderabad

$55

$0

$87

$83

$46 $18

$100

121

$200

$300

$400

$500

$600

$700

Assumptions: Grade A ofce building and dened as the gross lease cost. Medium standard ofce t-out construction rates. FM cost will be adopting the CBRE Research y-o-y ination rates and the discount rate for NP analysis is 10%.

24


13%

13%

10%

11%

49%

55%

58%

12%

13%

11%

50%

48%

55%

9%

7%

8%

6%

5%

72%

69%

70%

77%

72%

20%

21%

21%

17%

19%

6%

53%

43%

40% 60%

56% 75%

78%

41% 31%

36%

42%

40% 28%

35%

32%

29%

35%

35%

19%

16%

33%

31%

i h i l i i y u e e d o n k d r t a u r n e g n g y o e l a o r e i h l o u h a p o r o n i b a e i p r k i p P e r t d n e b a n m a a n k l a n k h o a j b a g l o z K S e a n g g D k a a u m b o u n g a T o r r a T g M a a n g u c i s M u S y r g B e L e J l h i n n d e G u a n a B B A a S y o u l S H B M H a G u K

282

$21

$125 $100

295

$31

$171

$114

Bangkok

$32

$175

58%

46% 31%

$179

11%

351

$115

$100

13%

372

$20

Sydney

Brisbane

9%

392

$35 $19

$292

REINSTATEMENT 5%

495

$32

$354

9%

511

$39

$354

FM COST 6%

46% 58%

Singapore

10%

LEASING COST

635 588

$34

$413

The below graph indicates the NPLCC proportion percentage between the 4 main cost components of the corporate real estate.

Corporate Real Estate needs to take into account the total cost of an asset when presenting the cost/benefit analysis to the business for real estate decisions. CBRE has provided a holistic cost guide as well as Workplace solutions to support corporate objectives. Nick Lee Regional Director, Asia Pacifc CBRE Project Management Global Leadership & Platform CBRE PROJECT MANAGEMENT

25

NET PRESENT LIFECYCLE COSTING The CBRE termed Net Present Lifecycle Costing (NPLCC) is an index that assumes a typical 5 year i nvestment time frame and not necessarily the lease period. NPLCC is a guide that benchmarks potential capital and operating expenses across the region over the investment period brought forward to present value. NPLCC provides holistic cost data to clients, enabling informed decisions and guides real estate strategies. FIT-OUT COST

Tokyo

LEASING COST

FM COST

$126

Beijing

$484

$105

Hong Kong

REINSTATEMENT

$38 $33

$488

$125

FIT-OUT COST

NPLCC (USD/Sqft) 673

15%

10%

38%

Shanghai

$109 $100

Seoul

$128

Delhi

$60

Mumbai

$66

$221

$263 $158

$42

327

Perth

$113

$163

$40

325

$36

325

Taipei

$86

Guangzhou Melbourne Jakarta

$96

$163

$103

$146

$81

Auckland

$84

Manila

$89

Kuala Lumpur

301

$30

297

$37

295

$31

$171

$114

Bangkok

$32

$175

286

$37

$121

237

$20

216

$28

207

Bangalore

$60

$113

$19

193

Gurgaon

$60

$113

$19

193

Hyderabad

$55

$87

$0

$83

$46 $18

121

$100

$200

$300

$400

$500

$600

$700

Assumptions: Grade A ofce building and dened as the gross lease cost. Medium standard ofce t-out construction rates. FM cost will be adopting the CBRE Research y-o-y ination rates and the discount rate for NP analysis is 10%.

24

13%

13%

10%

11%

49%

55%

58%

12%

13%

11%

50%

48%

55%

9%

7%

8%

6%

5%

72%

69%

70%

77%

72%

20%

21%

21%

17%

19%

6%

53%

43%

40% 60%

56% 75%

78%

41% 31%

36%

42%

40% 28%

35%

32%

29%

35%

35%

19%

16%

33%

31%

i h i h l i i y u e e d o n k d r t a u r n e g n g y o e l a o r e i l o u h a o r o n i b a e i p r k i p P e r t d n e b a n m a a k l a n k h o a j b a g l o a n z g a S e a n g a p K D k a a u m b o u n g T o T i s M u S y r g n g B e e r G u r n g M a n u c L e J l h n d a B B a i A S u l a M S H o B H y a G u K

282

$21

$125 $100

58%

46% 31%

$179

13%

351

$115

$100

REINSTATEMENT 5%

372

$20

Sydney

Brisbane

FM COST

392

$35 $19

$292

9%

11%

495

$32

$354

9%

511

$39

$354

LEASING COST

6%

46% 58%

Singapore

10%

635 588

$34

$413

The below graph indicates the NPLCC proportion percentage between the 4 main cost components of the corporate real estate.

Corporate Real Estate needs to take into account the total cost of an asset when presenting the cost/benefit analysis to the business for real estate decisions. CBRE has provided a holistic cost guide as well as Workplace solutions to support corporate objectives. Nick Lee Regional Director, Asia Pacifc CBRE Project Management Global Leadership & Platform CBRE PROJECT MANAGEMENT


25

NET PRESENT LIFECYCLE COSTING Tokyo Hyderabad

1.36

Gurgaon

Beijing 1.28

Hong Kong 1.19

Bangalore

Singapore 1.03 0.39

Kuala Lumpur

0.39

Shanghai 1.00

0.24

0.42

Manila

0.48

0.75

Bangkok 0.57

Delhi

0.71

0.58

Auckland

Seoul

0.79

0.44

0.66

0.60 0.60 0.61 0.66

Mumbai

0.66

Sydney

Jakarta Melbourne

Perth

Guangzhou Taipei

Brisbane

Through collaboration and extensive data mining from our integrated services, CBRE is able to provide our clients a concise index and representation of the major cost considerations for their commercial office investment. The NPLCC provides clients with the advantage of understanding the full cost over the total lease period. This together with the labour analytics can help develop real estate strategies that support corporate objectives. Royston Toh Senior Manager, Asia Pacifc CBRE Project Management Global Leadership & Platform

26


CBRE BALTIMORE OFFICE


27

NET PRESENT LIFECYCLE COSTING Tokyo Hyderabad

1.36

Gurgaon

Beijing 1.28

Hong Kong 1.19

Bangalore

Singapore 1.03 0.39

Kuala Lumpur

0.39

Shanghai 1.00

0.24

0.42

Manila

0.48

0.75

Bangkok 0.57

Delhi

0.71

0.58

Auckland

Seoul

0.79

0.44

0.66

0.60 0.60 0.61 0.66

Mumbai

0.66

Sydney

Jakarta Melbourne

Perth

Guangzhou Taipei

Brisbane

Through collaboration and extensive data mining from our integrated services, CBRE is able to provide our clients a concise index and representation of the major cost considerations for their commercial office investment. The NPLCC provides clients with the advantage of understanding the full cost over the total lease period. This together with the labour analytics can help develop real estate strategies that support corporate objectives. Royston Toh Senior Manager, Asia Pacifc CBRE Project Management Global Leadership & Platform

26

CBRE BALTIMORE OFFICE



27

ACTIVITY-BASED WORKING FM COST CONSIDERATIONS

28

Change Management

IT Cost

Continue change management and communication support until desired changes are fully incorporated in attitudes, behaviors and culture.

IT Function needs to be more pro-active in managing maintenance and ensuring that the platform that supports mobility (hardware, bandwidth availability, software) i s always operating at an optimum level.


Workplace Manager / Concierge

Real-time Occupancy

Upgraded FM support

Booking system

Services

Management

Re-shaping FM services to include concierge function. Expansion of roles to being an ambassador for the new work practices, answer questions about how the new workplace operates and taking a more proactive role in ensuring that everything works.

Real-time information on how space is being utilized, space loading monitoring so as to activate reactive/proactive RE and FM actions.

More frequent cleaning of surfaces and devices (keyboards and phones as they are shared), digitization support.

Advanced check-in system to monitor utilization for meeting rooms and workstations.


29

ACTIVITY-BASED WORKING FM COST CONSIDERATIONS

28

Change Management

IT Cost

Continue change management and communication support until desired changes are fully incorporated in attitudes, behaviors and culture.

IT Function needs to be more pro-active in managing maintenance and ensuring that the platform that supports mobility (hardware, bandwidth availability, software) i s always operating at an optimum level.


Workplace Manager / Concierge

Real-time Occupancy

Upgraded FM support

Booking system

Services

Management

Re-shaping FM services to include concierge function. Expansion of roles to being an ambassador for the new work practices, answer questions about how the new workplace operates and taking a more proactive role in ensuring that everything works.

Real-time information on how space is being utilized, space loading monitoring so as to activate reactive/proactive RE and FM actions.

More frequent cleaning of surfaces and devices (keyboards and phones as they are shared), digitization support.

Advanced check-in system to monitor utilization for meeting rooms and workstations.


29


31


30 30

ASIA PACIFIC FIT-OUT COST GUIDE GUIDE PACIFIC FIT -OUT COST


30 30

ASIA PACIFIC FIT-OUT COST GUIDE GUIDE PACIFIC FIT -OUT COST


JAPAN COST ANALYSIS – TOKYO

TAIWAN COST ANALYSIS – TAIPEI

TOKYO

TAIPEI

Tokyo continues to see strong demand from companies looking to expand their footprint or upgrade to better buildings. However, some tenants began to delay decisions ahead of the large volume of supply due for completion from 2018 onwards. Landlords of buildings that have been less successful in letting space started to offer more exible terms.

Ofce investment volume surged mainly driven by solid activity from owner-occupiers. Despite the surge in total investment turnover, the number of transactions remained low, reecting the ongoing lack of investable ofce assets. On the other hand, owners-occupiers continue to benet from low interest rates after the Central Bank cut policy rates.

US$168 17%

Hisanao Kajiura Senior Director Tokyo Project Management +81 3 52889749 [email protected]

US$113 Furniture M&E Works Builder Works Soft Cost

US$126 18%

39%

James Ho Senior Director Taiwan Project Management +886 2 77069538 [email protected]

16%

34%

19%

US$86 19%

Furniture M&E Works Builder Works Soft Cost

30%

US$65 19%

US$84

29%

29%

39%

37%

31

44%

36%

44% 43%

33%

13%

10%

8%

9%

8%

7%

Basic

Medium

High

Basic

Medium

High

SOUTH KOREA COST ANALYSIS – SEOUL

HONG KONG COST ANALYSIS

SEOUL

HONG KONG

Demand from the co-working sector is steadily rising. More rms are considering implementing workplace strategy, partly from a cost saving and space efciency angle. A number of rms have already implemented measures such as hot desking and smart ofces.

Serviced ofce and co-working space providers continued to register soli d demand for space. Decentralisation activity is expected to increase as secondary space and new supply in areas such as Kowloon East provides options for occupiers currently in expensive submarkets. US$200

US$166 Bruce Lee Senior Director South Korea Project Management +822 21705870 [email protected]

US$128 20%

20%

32%

US$91 15%

23%


21%

Steve Palfrey Senior Director Hong Kong Project Management +852 28202996 [email protected]

US$125 19%

45%

40%

Basic

38% 35%

12%

8%

Medium

High

13%

Basic

32


38%

45% 34%

15%

36%

US$84 15%

25%


33% 10%

8%

Medium

High CBRE PROJECT MANAGEMENT

33

JAPAN COST ANALYSIS – TOKYO

TAIWAN COST ANALYSIS – TAIPEI

TOKYO

TAIPEI

Tokyo continues to see strong demand from companies looking to expand their footprint or upgrade to better buildings. However, some tenants began to delay decisions ahead of the large volume of supply due for completion from 2018 onwards. Landlords of buildings that have been less successful in letting space started to offer more exible terms.

Ofce investment volume surged mainly driven by solid activity from owner-occupiers. Despite the surge in total investment turnover, the number of transactions remained low, reecting the ongoing lack of investable ofce assets. On the other hand, owners-occupiers continue to benet from low interest rates after the Central Bank cut policy rates.

US$168 17%

Hisanao Kajiura Senior Director Tokyo Project Management +81 3 52889749 [email protected]


US$126 18%

39%

James Ho Senior Director Taiwan Project Management +886 2 77069538 [email protected]

19%


30%

US$65 29%

29%

39%

37% 34%

US$86

19%

US$84 16%

19%

44%

36%

44% 43%

33%

13%

10%

8%

9%

8%

7%

Basic

Medium

High

Basic

Medium

High

SOUTH KOREA COST ANALYSIS – SEOUL

HONG KONG COST ANALYSIS

SEOUL

HONG KONG

Demand from the co-working sector is steadily rising. More rms are considering implementing workplace strategy, partly from a cost saving and space efciency angle. A number of rms have already implemented measures such as hot desking and smart ofces.

Serviced ofce and co-working space providers continued to register soli d demand for space. Decentralisation activity is expected to increase as secondary space and new supply in areas such as Kowloon East provides options for occupiers currently in expensive submarkets. US$200

US$166 Bruce Lee Senior Director South Korea Project Management +822 21705870

US$128 20%

20%


32%

US$91

[email protected]

15%

Steve Palfrey Senior Director Hong Kong Project Management +852 28202996 [email protected]

23%

US$125 19%

45%

40%

Basic

38% 35%

12%

8%

Medium

High

13%

Basic

32

38%

45% 34%

15%

36%

US$84 15%

25%


21%

33% 10%

8%

Medium



CHINA COST ANALYSIS – BEIJING/ GUANGZHOU

Catherine Xiong Senior Director China Project Management +86 10 85880788 [email protected]

CHINA COST ANALYSIS – SHANGHAI

BEIJING

SHANGHAI

Beijing saw stronger demand from domestic companies but the general focus among multinationals continued to be on cost s aving or renewals. The period saw some surrender leases and relocations to cheaper areas. US$156

Shanghai enjoyed a positive quarter as market sentiment remained positive. Solid leasing demand was recorded across a wide range of sectors but occupiers took longer to make decisions due to the introduction of the new VAT.

19%


US$105 US$75 20%

21%

40%

37%

34%

US$152 Bahtiyar Tay Senior Director China Project Management +86 21 24011403 bahtiyar.tay@ cbre.com.cn

20%

31%

20%

29% 28%

20%

13%

10%

Medium

High

GUANGZHOU

US$96

29% 28%

28%

Furniture

US$148

41%

38%

35%

18%


US$100 US$71

Basic

33

M&E Works Builder Works Soft Cost

17%

14%

10%

Basic

Medium

High

19%

19%

US$65 13%

37% 37%

36% 34% 33%

34


33%

18%

11%

10%

Basic

Medium


35

CHINA COST ANALYSIS – BEIJING/ GUANGZHOU BEIJING

SHANGHAI

Beijing saw stronger demand from domestic companies but the general focus among multinationals continued to be on cost s aving or renewals. The period saw some surrender leases and relocations to cheaper areas. US$156

Shanghai enjoyed a positive quarter as market sentiment remained positive. Solid leasing demand was recorded across a wide range of sectors but occupiers took longer to make decisions due to the introduction of the new VAT.

19%

Catherine Xiong Senior Director China Project Management +86 10 85880788 [email protected]

CHINA COST ANALYSIS – SHANGHAI


US$105 US$75 20%

21%

40%

37% 31%

Basic

US$100

20%

29% 28%

20%

10%

Medium

Furniture

US$148 US$96

29% 28%

28%

High

GUANGZHOU

41%

38%

35% 13%


20%

US$71

34%

18%

US$152 Bahtiyar Tay Senior Director China Project Management +86 21 24011403 bahtiyar.tay@ cbre.com.cn


17%

14%

10%

Basic

Medium

High

19%

19%

US$65 13%

37% 37%

36% 34% 33%

34

33%

18%

11%

10%

Basic

Medium



INDIA COST ANALYSIS – MUMBAI/ HYDERABAD/PUNE/KOLKATA

INDIA COST ANALYSIS – NEW DELHI/ BANGALORE/CHENNAI

MUMBAI

NEW DELHI/ BANGALORE/ CHENNAI

Co-working space is gaining traction, with several new openings in Bangalore and Mumbai in recent quarters. Most providers are domestic operators focusing on catering to start-ups. Among domestic rms, particularly those in the nancial services sector, there is still a strong focus on acquiring properties for self-use,especially in Mumbai. US$85

New Delhi is still registering solid demand for front ofce space, activities mainly focus on Gurgaon, where IT companies are particularly active. Many companies in Bangalore have capped their growth as city centre rents are quite high.

15%

Gurjot Bhatia Managing Director India Project Management +91 1142490200 [email protected]

US$66

Furniture M&E Works

US$78 Furniture

Builder Works Soft Cost

14%

US$60

14% 44%

US$47 16%

35


14%

44%

44%

US$43 13%

42%

43%

30% 42%

29%

30%

28% 29% 14%

13%

11%

Basic

Medium

High

28%

HYDERABAD/ KOLKATA/ PUNE

17%

14%

12%

Basic

Medium

High

Recent quarters have seen stronger leasing activity in Hyderabad which offers lower rents and is emerging as an alternative to Bangalore. The city was the country’s original IT hub and is returning to prominence after an end to several years of political i nstability.

US$70 13%

US$55 13%


41%

US$40 12%

40 %

40 %

28% 28%

28% 20%

Basic

36


19%

Medium

18%


37

INDIA COST ANALYSIS – MUMBAI/ HYDERABAD/PUNE/KOLKATA MUMBAI

NEW DELHI/ BANGALORE/ CHENNAI

Co-working space is gaining traction, with several new openings in Bangalore and Mumbai in recent quarters. Most providers are domestic operators focusing on catering to start-ups. Among domestic rms, particularly those in the nancial services sector, there is still a strong focus on acquiring properties for self-use,especially in Mumbai. US$85

New Delhi is still registering solid demand for front ofce space, activities mainly focus on Gurgaon, where IT companies are particularly active. Many companies in Bangalore have capped their growth as city centre rents are quite high.

15%

Gurjot Bhatia Managing Director India Project Management +91 1142490200 [email protected]

INDIA COST ANALYSIS – NEW DELHI/ BANGALORE/CHENNAI

US$66

Furniture M&E Works

US$78 Furniture

Builder Works Soft Cost

US$60

14% 44%

US$47 16%


14%

14%

44%

44%

US$43 13%

42%

43%

30% 42%

29%

30%

28% 29% 14%

13%

11%

Basic

Medium

High

28%

HYDERABAD/ KOLKATA/ PUNE

17%

14%

12%

Basic

Medium

High

Recent quarters have seen stronger leasing activity in Hyderabad which offers lower rents and is emerging as an alternative to Bangalore. The city was the country’s original IT hub and is returning to prominence after an end to several years of political i nstability.

US$70 Furniture M&E Works Builder Works

13%

US$55 13%

Soft Cost

41%

US$40 40 %

12% 40 %

28% 28%

28%

36

18%

19%

20%

Basic

Medium



SOUTH EAST ASIA COST ANALYSIS – SINGAPORE/KUALA LUMPUR

SOUTH EAST ASIA COST ANALYSIS – VIETNAM/BANGKOK

SINGAPORE

HCMC

HANOI

Providers of co-working space are emerging as a new driver of demand. Recent quarters have seen several major operators pre-commit to new space. Traditional serviced ofce providers are responding by offering similar product. Landlords are responding to weak demand by being creative to retain tenants such as by providing a capital contribution towards t-out costs and other incentives. US$127

The unchanged supply in ofce space allowed HCMC ofce market to absorb the remaining space in both Grade A and B. However, by the end of 2016, there will be a new wave of supply in decentralized area, expecting the market to change in both rent and vacancy rate.

Large-scale ofce buildings are being actively tted out for launch, which will add up both grade A and B stocks. This is expected to put downward pressure on rents.

Garth Chapman Senior Director SEA Project Management +65 62291114 [email protected]

20%

US$109

37


US$105

31%

US$84


28% 20%

US$61 38%

22%

US$80

35% 37%

40%

38%

16%

27% 36%

40% 33% 34% 10%

Basic

7%

Medium

27%

30%

6%

High

10%

8%

7%

Basic

Medium

High

BANGKOK

KUALA LUMPUR The coming few years will continue to be a tenants’ market with more quality ofce space available in the market and owners/investors may experience stiff competition in retaining existing tenants or leasing out new space. Prime rentals are expected stay stable, but may see a dip in occupancy rates with the increase competitiveness.

The current market condition of low vacancy rates and rising rents i s expected to continue due to the limited future supply with reasonable level of demand in the next few years. However, after 2018, the market condition could change if all the planned ofce developments (1 million sq. m.) were to start at the same time. US$134

US$125 23%

US$87

16%


US$84

22%

US$46

38%

39%

15%

40% 32%

38%

39%

31%

36%

32%

38


39%

17% 38%

US$64 17%


35%

11%

9%

7%

Basic

Medium

High

12%

Basic

8%

Medium

6%

High


39

SOUTH EAST ASIA COST ANALYSIS – SINGAPORE/KUALA LUMPUR

SOUTH EAST ASIA COST ANALYSIS – VIETNAM/BANGKOK

SINGAPORE

HCMC

HANOI

Providers of co-working space are emerging as a new driver of demand. Recent quarters have seen several major operators pre-commit to new space. Traditional serviced ofce providers are responding by offering similar product. Landlords are responding to weak demand by being creative to retain tenants such as by providing a capital contribution towards t-out costs and other incentives. US$127

The unchanged supply in ofce space allowed HCMC ofce market to absorb the remaining space in both Grade A and B. However, by the end of 2016, there will be a new wave of supply in decentralized area, expecting the market to change in both rent and vacancy rate.

Large-scale ofce buildings are being actively tted out for launch, which will add up both grade A and B stocks. This is expected to put downward pressure on rents.

Garth Chapman Senior Director SEA Project Management +65 62291114 [email protected]

20%

US$109



31%

US$84 28%

20%

US$61 38%

22%

US$80

35% 37%

40%

38%

16%

27% 36%

40% 33% 34% 10%

7%

Basic

Medium

27%

30%

6%

High

10%

8%

7%

Basic

Medium

High

BANGKOK

KUALA LUMPUR

The current market condition of low vacancy rates and rising rents i s expected to continue due to the limited future supply with reasonable level of demand in the next few years. However, after 2018, the market condition could change if all the planned ofce developments (1 million sq. m.) were to start at the same time. US$134

The coming few years will continue to be a tenants’ market with more quality ofce space available in the market and owners/investors may experience stiff competition in retaining existing tenants or leasing out new space. Prime rentals are expected stay stable, but may see a dip in occupancy rates with the increase competitiveness. US$125 23%

US$87

US$84

22%

17%

US$46

38%

39%

15%

40% 32%

38%

39%

31%

36%

32%


35%

11%

9%

7%

Basic

Medium

High

12%

8%

Basic

SOUTH EAST ASIA COST ANALYSIS – JAKARTA/MANILA

Medium

6%

High


39

PACIFIC COST ANALYSIS – SYDNEY/ MELBOURNE

JAKARTA

PACIFIC

With the ongoing inux of new ofce buildings for the next 1-2 years and given that for the past 1 year, the total amount of demand has been vastly superseded by the total amount of supply, occupancies and rental rates will have further adjustments. Occupancy rates of CBD ofce in Q2 is still on the downhill trend due to limited demand with strong supply situation.

Landlords are reviewing how they interact with tenants as they seek to become more customercentric. One popular measure has been to i ntroduce simplied and shorter-form leases. Occupiers are pushing landlords to install high quality end-of-trip facilities for employees. There is demand for co-working space but some concern over the longevity of this sector.

US$110 Garth Chapman Senior Director SEA Project Management +65 62291114 [email protected]

39%

17% 38%

US$64

38


16%


23%

US$81


21%

US$57

SYDNEY Ian Rea Managing Director Pacic Project Management +61 2 9333 9102 [email protected]

Sydney enjoyed solid leasing activity supported by strong white collar employment growth. Financial, business services and education & training rms were especially busy. US$180 19%

36%

US$115

18%


19%

37%

37%

US$85

38%

15%

33% 32%

32%

37%

37% 34%

12%

10%

31%

8% 32%

Basic

Medium

High

16%

MANILA Buildings slated for turnover in the next 2 years continue to be traded at fast rates as more companies, both business process outsourcing (BPO) and non-BPO, help build up this quarter’s tenant representation sales. US$129 16%


Basic

13%

10%

Medium

High

MELBOURNE Both enquiry levels and the volume of leasing transactions recorded a steady increase in Melbourne. Technology rms were noticeably more active this quarter. US$141 19%

US$89

US$103

39%

17%


18% 36%

US$73 US$50

39%

14%

15%

35%

38%

33%

36% 12% ASIA PACIFIC FIT-OUT COST GUIDE

Basic

35%

39% 33%

35%

40

37%

8%

Medium

6%

High

18%

Basic

12%

Medium

10%

High


41

SOUTH EAST ASIA COST ANALYSIS – JAKARTA/MANILA

PACIFIC COST ANALYSIS – SYDNEY/ MELBOURNE

JAKARTA

PACIFIC

With the ongoing inux of new ofce buildings for the next 1-2 years and given that for the past 1 year, the total amount of demand has been vastly superseded by the total amount of supply, occupancies and rental rates will have further adjustments. Occupancy rates of CBD ofce in Q2 is still on the downhill trend due to limited demand with strong supply situation.

Landlords are reviewing how they interact with tenants as they seek to become more customercentric. One popular measure has been to i ntroduce simplied and shorter-form leases. Occupiers are pushing landlords to install high quality end-of-trip facilities for employees. There is demand for co-working space but some concern over the longevity of this sector.

US$110 Garth Chapman Senior Director SEA Project Management +65 62291114

23%

US$81


21%

[email protected]

US$57

SYDNEY Ian Rea Managing Director Pacic Project Management +61 2 9333 9102

Sydney enjoyed solid leasing activity supported by strong white collar employment growth. Financial, business services and education & training rms were especially busy. US$180 19%

[email protected] 36%

US$115

18%


19%

37%

37%

US$85

38%

15%

33% 32%

32%

37%

37% 34%

12%

10%

31%

8% 32%

Basic

Medium

High

16%

MANILA Buildings slated for turnover in the next 2 years continue to be traded at fast rates as more companies, both business process outsourcing (BPO) and non-BPO, help build up this quarter’s tenant representation sales. US$129 16%


Basic

13%

10%

Medium

High

MELBOURNE Both enquiry levels and the volume of leasing transactions recorded a steady increase in Melbourne. Technology rms were noticeably more active this quarter. US$141 19%

US$89

US$103

39%

17%


18% 36%

US$73 US$50

39%

14%

15%

35%

38%

35%

39% 33%

36%

33%

35%

12%

40

Basic


37%

8%

Medium

18%

6%

Basic

High

PACIFIC COST ANALYSIS – BRISBANE/PERTH BRISBANE

12%

Medium

High


41

PACIFIC COST ANALYSIS – AUCKLAND AUCKLAND

Brisbane continued to see a certain degree of uncertainty but the worst appears to be over. Lease expiries are driving deals. More companies are taking smaller spaces and/or moving to a exible working environment.

US$163 15%

US$135 Furniture

Ian Rea Managing Director Pacic Project Management +61 2 9333 9102 [email protected]

10%

21%

US$100

US$114



12% 32%

US$65

20%

10%

36%

30%

US$70 27%

14%

36%

36% 38%

37%

40%

32% 32%

23%

33%

Basic

16%

Basic

12%

Medium

20%

Medium

17%

High

11%

High

PERTH In Perth the period saw ight to quality across all sectors driven by expiring leases. Occupiers in this market are taking advantage of landlords’ weakness to secure attractive deals.

US$171 19%


US$113 18% 35%

US$78 17%

35%

34% 33% 31% 32% 17%

Basic

42


16%

Medium

13%

High


43

PACIFIC COST ANALYSIS – BRISBANE/PERTH BRISBANE

PACIFIC COST ANALYSIS – AUCKLAND AUCKLAND

Brisbane continued to see a certain degree of uncertainty but the worst appears to be over. Lease expiries are driving deals. More companies are taking smaller spaces and/or moving to a exible working environment.

US$163 15%

US$135 Furniture

Ian Rea Managing Director Pacic Project Management +61 2 9333 9102 [email protected]

US$114


21%

US$100


12% 32%

US$65

20%

10%

36%

30%

US$70 27%

14%

36%

36% 38%

37%

40%

32% 32%

23%

33%

Basic

16%

Basic

12%

20%

Medium

17%

High

11%

Medium

High

PERTH In Perth the period saw ight to quality across all sectors driven by expiring leases. Occupiers in this market are taking advantage of landlords’ weakness to secure attractive deals.

US$171 Furniture M&E Works Builder Works

19%

Soft Cost

US$113 18% 35%

US$78 17%

35%

34% 33% 31% 32%

17%

16%

Basic

42

13%

Medium

High



2016 GLOBAL FIT-OUT COST INDEX The 2016 edition cost guide included the global cost index to benchmark similar projects in key markets across the globe. For more detailed breakdown by cities within the region, please refer to the respective regional cost guides.

CBRE hope that this can guide corporate clients to review the cost globally but would appreciate that a CBRE professional is engaged in-location to support in producing a more specic budget estimate for any form of budgetary approval

purposes. The index wheel should not be replicated or adopted for other documentation without direct consultation with CBRE.

New York City 1.25

Frankfurt

Bangalore 1.20

0.55

Sao Paulo

1.11

0.84

0.91

Hong Kong

1.02

Mexico City

Sydney 0.92 1.00

Los Angeles

London

43

2016 GLOBAL FIT-OUT COST INDEX The 2016 edition cost guide included the global cost index to benchmark similar projects in key markets across the globe. For more detailed breakdown by cities within the region, please refer to the respective regional cost guides.

CBRE hope that this can guide corporate clients to review the cost globally but would appreciate that a CBRE professional is engaged in-location to support in producing a more specic budget estimate for any form of budgetary approval

purposes. The index wheel should not be replicated or adopted for other documentation without direct consultation with CBRE.

New York City 1.25

Frankfurt

Bangalore 1.20

0.55

Sao Paulo

1.11

0.84

0.91

Hong Kong

1.02

Mexico City

Sydney 0.92 1.00

Los Angeles

44

London



KEY CONTACTS CBRE CONTACTS

ACKNOWLEDGEMENTS

Martin Woods

Royston Toh

Senior Managing Director, CBRE Project Management, Asia Pacifc +852 2820 2869 [email protected]

Senior Manager CBRE Project Management, Asia Pacifc +65 6229 1165 [email protected]

Zac Zdravev

Brendan Bruce

Senior Director CBRE Project Management, Asia Pacifc +65 6326 1661 [email protected]

Managing Director Haworth, South East Asia

Nick Lee Regional Director CBRE Project Management, Asia Pacifc +852 2820 8178 [email protected]

Cameron Ahrens Executive Director CBRE Enterprise Facilities Management, Asia Pacifc +65 6229 1122 [email protected]

Peter Andrew Regional Director CBRE Workplace Strategies, Asia Pacifc +65 6326 1677 [email protected]

Rohini Saluja Executive Director, Asia Pacifc CBRE Advisory & Transaction +65 6326 1665 [email protected]

© 2016 CBRE Group, Inc. All Rights Reserved. CBRE has taken every care in the preparation of this report. The sources of information used are believed to be accurate and reliable, but no guarantee accuracy or completeness can be given. Neither CBRE, nor any CBRE company, nor any director, representative or employee of CBRE company, accepts liability for any direct or consequential loss arising from the use of this document or its content. The information and opinions contained in this report are subject to change without notice. No part or parts of this report may be stored in a retrieval system or reproduced or transmitted in any form or by any means electronic, mechanical, reprographics, recording or otherwise, now known or to be devised without prior consent from CBRE. Agency Licence No.: L3002163I.

45

KEY CONTACTS CBRE CONTACTS

ACKNOWLEDGEMENTS

Martin Woods

Royston Toh

Senior Managing Director, CBRE Project Management, Asia Pacifc +852 2820 2869 [email protected]

Senior Manager CBRE Project Management, Asia Pacifc +65 6229 1165 [email protected]

Zac Zdravev

Brendan Bruce

Senior Director CBRE Project Management, Asia Pacifc +65 6326 1661 [email protected]

Managing Director Haworth, South East Asia

Nick Lee Regional Director CBRE Project Management, Asia Pacifc +852 2820 8178 [email protected]

Cameron Ahrens Executive Director CBRE Enterprise Facilities Management, Asia Pacifc +65 6229 1122 [email protected]

Peter Andrew Regional Director CBRE Workplace Strategies, Asia Pacifc +65 6326 1677 [email protected]

Rohini Saluja Executive Director, Asia Pacifc CBRE Advisory & Transaction +65 6326 1665 [email protected]

© 2016 CBRE Group, Inc. All Rights Reserved. CBRE has taken every care in the preparation of this report. The sources of information used are believed to be accurate and reliable, but no guarantee accuracy or completeness can be given. Neither CBRE, nor any CBRE company, nor any director, representative or employee of CBRE company, accepts liability for any direct or consequential loss arising from the use of this document or its content. The information and opinions contained in this report are subject to change without notice. No part or parts of this report may be stored in a retrieval system or reproduced or transmitted in any form or by any means electronic, mechanical, reprographics, recording or otherwise, now known or to be devised without prior consent from CBRE. Agency Licence No.: L3002163I.

www.cbre.com

2016 APAC Fit-out Cost Guide - Occupier Projects

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