SKYSCRAPERS GLOBAL CITIES 2015 REPORT - Knight Frank

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SKYSCRAPERS GLOBAL CITIES 2015 REPORT - Knight Frank
GLOBAL CITIES
SKYSCRAPERS
2015 REPORT
SKYSCRAPERS GLOBAL CITIES 2015 REPORT - Knight Frank
GLOBAL           SKYSCRAPERS
          CITIES           2015 REPORT

TABLE OF                                                                                                   LOOK SKYWARDS

                                                                                                                                                                                                                                                     03
                                                                                                                                                                                                                                                     INTRODUCTION
CONTENTS
                                                                                                           The world’s cities are in the midst of a skyscraper
                                                                                                           building boom and this report addresses the question,
                                                                                                           why do we need these giant buildings?

                                                                                                           INTRODUCTION BY — JOHN
                                                                                                                                INTRODUCTION
                                                                                                                                     SNOWBY — JAMES D. KUHN
                                                                                                                             Head of Commercial,   President,
                                                                                                                             Knight Frank          Newmark Grubb Knight Frank

                                                                                                           Our analysis shows that skyscrapers     are cut, which benefits social and
                                                                                                           are the optimum means of
                                                                                                           addressing major economic and
                                                                                                                                                   family lives. When offices and
                                                                                                                                                   homes are lifted above street level,
                                                                                                                                                                                           THE WORLD’S TALLEST
                                                                                                           geographic challenges facing cities     the ground floors and basements         BUILDING TIMELINE
                                                                                                           today. These are:                       of buildings are freed up for shops
                                                                                                                                                   and leisure facilities. The spaces
                                                                                                           »» In order to accommodate
                                                                                                                                                   between tower clusters can be
                                                                                                           economic and population growth
                                                                                                                                                   developed as parks and public
                                                                                                           a city can either move outwards or
                                                                                                           upwards. Moving outwards breaks
                                                                                                                                                   areas; while skylines are enlivened     2019
                                                                                                                                                   with iconic architecture.               Kingdom Tower,
                                                                                                           up business clusters, and creates
                                                                                                           political problems, like allowing       »» Global real estate capital markets
                                                                                                                                                                                           Jeddah
                                                                                                                                                                                                                               2010
                                                                                                                                                                                                                                     Burj Khalifa,
                                                                                                           development on green fields around      are seeing more activity from those                                                     Dubai

                                                 12-14
                                                                                                           cities. This moves the pendulum         who wish to deploy money in very

4-11
T OW ER ING A BOV E                              SK YSCR A PER
                                                                                                           of debate in favour of building
                                                                                                           upwards to provide more homes
                                                                                                           and business space.
                                                                                                                                                   large sums (above the $1 billion
                                                                                                                                                   mark). The size of skyscrapers makes
                                                                                                                                                   them attractive to such investors,
                                                                                                                                                                                           2003
                                                                                                                                                                                           Taipei 101,
                                                                                                                                                                                           Taipei
                                                                                                                                                                                                                                1998
                                                                                                                                                   and this will encourage a movement                                          Petronas Towers,
THE REST                                         INDEX                                                     »» For companies today, staff                                                                                          Kuala Lumpur
                                                                                                                                                   towards developing in scale.
                                                                                                           retention is high up the agenda.
Firms are increasingly focused on keeping        Our league table ranking the world’s                      Losing star fee-earners is damaging     Recent enthusiasm for skyscrapers       1 9 74
their staff happy, and the skyscraper delivers   leading cities as high rise centres                                                                                                       The Sears Tower,
an office people want to work in.                of commerce and living.
                                                                                                           for business, and even the cost         reflects a shift in the global          Chicago
                                                                                                           of replacing support staff can be       economy towards city centres, as                                             1972
                                                                                                           higher than the rent paid on their      automation in factories means that                                        World Trade Center,
                                                                                                                                                                                                                                       New York
                                                                                                           workstations. Skyscrapers are one       more humans do knowledge jobs in
                                                                                                           of several means firms have found       offices. Today’s knowledge workers      1931
                                                                                                           to make the office an exciting place    increasingly want to live near          The Empire State Building,
                                                                                                                                                                                           New York
                                                                                                           to be. Also, an inspirational office    work, while firms want staff to feel

15                                               16-17                                         18-19       can encourage staff to interact and     inspired by their workplace. The                                     1 9 3 0/ 3 1
                                                                                                                                                                                                                           The Chrysler Building,
                                                                                                           share knowledge, thus driving           skyscraper is successfully delivering                                               New York
                                                                                                            up productivity.                       the volume and type of homes and        1930
W EST SIDE                                       FIVE FUTURE                                   A BOUT      »» As well as creating a better
                                                                                                                                                   offices our cities require.             Bank of Manhattan
                                                                                                                                                                                           Trust Building,
STORY                                            TRENDS                                        THE GROUP   working environment, skyscrapers        We hope you find this report            New York

Manhattan’s Far West Side is experiencing        What are the global trends that are sending               can make the city a better place        informative, and if you wish to                                               1913
a transformation with a new skyscraper           city skylines across the world ever higher?               to live. If more homes can be built     discuss any of the issues raised,                                     The Woolworth Building,
                                                                                                                                                                                                                                      New York
district under construction.                                                                               near to work, commuting times           please do not hesitate to contact us.

2
SKYSCRAPERS GLOBAL CITIES 2015 REPORT - Knight Frank
GLOBAL      SKYSCRAPERS
       CITIES      2015 REPORT

TOWERIN
                                                                                                                                                                                                                   For a worker earning over £35,000            for staff who wish to jog or cycle to
                                                                                                                                                                         SKYSCRAPER (UPPER FLOORS) RENTAL GROWTH

                                                                                                                                                                                                                                                                                                        04-05
                                                                                                                                                                                                                   p.a. in London’s The City financial          work are becoming common, as is
                                                                                                                                                                         SIX MONTHS TO END OF 2014                 district, should they leave, the fee         replacing car parking spaces with

                                                                                                                                                                                                                                                                                                        TOWERING ABOVE THE REST
                                                                                                                                                                         Source: Knight Frank Research,
                                                                                                                                             Dubai: The city has added   Newmark Grubb Knight Frank Research       paid to a recruitment consultant             bike racks. A gym in the building,
                                                                                                                                              almost 190 skyscrapers
                                                                                                                                                                                                                   to replace them is greater than              and eating establishments are also

                                                                                                                                                                         20.0%
                                                                                                                                                            since 2000

                                                                                                                                                                         10.6%
                                                                                                                                                                         13.2%

                                                                                                                                                                         0.0%
                                                                                                                                                                         0.8%
                                                                                                                                                                         11.3%

                                                                                                                                                                         -1.2%
                                                                                                                                                                         2.9%

                                                                                                                                                                         1.5%
                                                                                                                                                                         6.1%

                                                                                                                                                                         2.1%
                                                                                                                                                                         7.7%
                                                                                                                                                                                                                   the annual rent on their office              now increasingly valued by tenants.
                                                                                                                                                                                                                   work station; and that head-hunter           Extensive basement areas and retail
                                                                                                                                                                                                                   charge is just a small part of the           concourses that are typical among
                                                                                                                                                                                                                   overall staff turnover cost. This            skyscrapers can help on these issues.
                                                                                                                                                                                                                   means that even for staff in support
                                                                                                                                                                                                                   roles the expense of replacement
                                                                                                                                                                                                                   overshadows property costs, and
                                                                                                                                                                                                                                                                     MOVING TO A NEW TOWER
                                                                                                                                                                                                                   this is before considering the effect              CAN OFFER A SENSE OF A
                                                                                                                                                                                                                   an enhanced working environment                   NEW BEGINNING THAT WILL

ABOVE THE REST
                                                                                                                                                                                                                   can have on productivity.                       ENCOURAGE STAFF TO EMBRACE
                                                                                                                                                                                                                   As a consequence firms when                            THE CHANGES.
                                                                                                                                                                                                                   approaching property now strive for:
                                                                                                                                                                                                                                                                To this backdrop, skyscrapers are
                                                                                                                                                                                                                    1
                                                                                                                                                                                                                          The office as the place to be:     flourishing. They are seen as a way
                                                                                                                                                                                                                             Firms aim to create offices        to give staff a workplace that feels
From New York to Shanghai, companies want                                                                                                                                                                                    that staff want to spend time      special, and promotes esprit-de-
exciting new work places to inspire staff, while more                                                                                                                                                                        in. This is partly achieved by     corps – an office you want to tell
                                                                                                                                                                                                                             innovative fit-out, ranging
people want to live near work. The skyscraper is                                                                                                                                                                             from games rooms, to buffets
                                                                                                                                                                                                                                                                people about at a dinner party.
seen as the best way to achieve these goals.

                                                                                                                                                                         New York (Midtown)
                                                                                                                                                                                                                             and cafés, to private work          EVERYONE GETS LIGHT

                                                                                                                                                                         San Francicso
                                                                                                                                                                         London (City)
                                                                                                                                                                         Los Angeles
                                                                                                                                                                                                                             areas. Being in a skyscraper is

                                                                                                                                                                         Hong Kong

                                                                                                                                                                         Singapore
                                                                                                                                                                         Shanghai
                                                                                                                                                                         Frankfurt
WRITTEN BY — J AMES ROBERTS                                                                                                                                                                                                                                    Insurance firm, Markel, has

                                                                                                                                                                         Sydney

                                                                                                                                                                         Beijing
                                                                                                                                                                         Taipei

                                                                                                                                                                         Dubai
                                                                                                                                                                                                                             another way to give the office
              Chief Economist, Knight Frank                                                                                                                                                                                                                     recently moved their London office
                                                                                                                                                                                                                             wow factor in the eyes of staff.
                                                                                                                                                                                                                                                                into 20 Fenchurch Street, a Rafael
Skyscrapers are a rising tide in          were out-of-town and low rise,                                                                                                                                            2
                                                                                                                                                                                                                         The office as a catalyst of          Viñoly designed tower. Andy Davies,
the modern global city. London            and thus cheaper, were growing
                                                                                                                                                                                                                           integration: This is where firms     the COO and CFO, sees being in a
has added 23 new skyscrapers              in popularity with companies.
                                                                                                                                                                                                                           use the office to bring about        skyscraper as a way of improving
(a building over 350 feet high)           Skyscrapers like the city centres
                                                                                                                                                                                                                           changes in working habits, so        the workplace experience.
since the turn of the millennium,         they occupied were viewed as
compared to 17 in the preceding           expensive and in decline.                                                                                                                                                        people mix and interact to create    Markel found a tower floor plate has
forty years. While New York                                                                                                                                                                                                a greater sense of community.        an advantage over a conventional
                                          However, firms today increasingly                                                                                                                                                Staff are encouraged to leave
added four new towers in 2014                                                                                                                                                                                                                                   building as there are no desks
                                          view real estate as a means of                                                                                                                                                   desks and move around the
alone, including the iconic One                                                                                                                                                                                                                                 remote from a window. According
                                          controlling a much bigger cost,                                                                                                                                                  office and speak face-to-face.
World Trade Center. This sounds                                                                                                                                                                                                                                 to Davies: “Wherever you go in the
                                          namely staff retention. This has                                                                                                                                                 Moving to a new tower can
impressive until one considers                                                                                                                                                                                                                                  new office, everyone gets natural
                                          coincided with a movement of                                                                                                                                                     offer a sense of a new beginning
that Dubai has built nearly 190                                                                                                                                                                                                                                 light, even at their desk; and the
                                          people back into cities, reversing                                                                                                                                               that will encourage staff to
skyscrapers since 2000, and                                                                                                                                                                                                                                     views are spectacular.”
                                          the preceding exodus to the suburbs                                                                                                                                              embrace change.
Shanghai over 90.
                                          – New York City’s population has                                                                                                                                                                                      Markel installed internal staircases
                                                                                                                                                                                                                    3
The new enthusiasm for                    increased by 19% since 1980.                                                                                                                                                   he office which is close
                                                                                                                                                                                                                        T                                       that pass through the floors to
                                                                                   Chicago’s Willis Tower
skyscrapers is partly one of city                                                                                                                                                                                       to home: This final point in            encourage staff to circulate in the
                                                                                   (formerly Sears Tower) was
status. Less mentioned are recent             SKYSCRAPERS: IT’S ALL ABOUT PEOPLE   the world’s tallest building                                                                                                         particular has brought offices          office rather than remain tied to
changes in how firms perceive                                                      from 1974 to 1998                                                                                                                    back into city centres from             desks. This increased the incidence
                                          For private sector services firms
offices, particularly in relation to                                                                                                                                                                                    out-of-town locations, which            of chance encounters where
                                          (the mainstay of city office
their workers.                                                                                                                                                                                                          makes skyscrapers important             knowledge can be shared. Again,
                                          occupation) salaries typically
                                                                                                                                                                                                                        to re-introduce more business           the open environment and natural
In the past, offices were typically       account for around half of
                                                                                                                                                                                                                        space into crowded CBDs.                light facilitate this cultural change
viewed as a cost that companies           operating expenses. However, an
                                          unquantifiable cost is the loss of                                                                                                                                       Many firms now want to support               – according to Davies, “in the new
wanted to minimise, with little
                                          value when successful staff leave,                                                                                                                                       the work/life balance, and try to            office, you can’t hide”.
thought given to how they could
                                                                                                                   20 Fenchurch Street,
boost productivity. Consequently,         and the additional expense of                                                                                                                                            fit the office around lifestyles. For
                                                                                                                      one of London’s new
in the 1970s and 1980s, offices that      replacing them.                                                                  wave of towers                                                                          instance, locker-rooms and showers           CONTINUED ON                   06-07
SKYSCRAPERS GLOBAL CITIES 2015 REPORT - Knight Frank
A
       GLOBAL      SKYSCRAPERS                                                                                                                                                  Manhattan is seeing two new
       CITIES      2015 REPORT                                                                                                                                                  tower clusters developed

                                                                                                                                                                                overtake The Shanghai Tower in                                    REINVENTING THE CITY
                                         SKYSCRAPER PRIME YIELD SPREAD OVER

                                                                                                                                                                                                                                                                                            06-07
                                                                                                                                    B                                           height in 2016. Its design includes
                                         10 YEAR BONDS (BASIS POINTS)                                                                                                           a three storey ‘retail bridge’ that                              Barangaroo, much like London’s

                                                                                                                                                                                                                                                                                            TOWERING ABOVE THE REST
                                         Source: Knight Frank Research,                                                                                                         will connect the tower to future                                 Canary Wharf, is an example of
                                         Newmark Grubb Knight Frank Research, Thomson Reuters
                                                                                                                                                                                neighbouring developments.                                       former-industrial land in a dense city
                                                                                                                                                                                Guangzhou has constructed a                                      centre being wholesale redeveloped
CONTINUED FROM                  04-05
                                           SHANGHAI’S SUPER TOWER                                                                                                               purpose built CBD, the Zhujiang                                  to match economic changes.
                                                                                                                                                C                               New Town, which incorporates
 ICONIC IS NOT ENOUGH                    The Shanghai Tower, which                                                                                                                                                                               Where there is a large swathe
                                                                                                                                                                                skyscrapers like the Guangzhou
Martin Jepson, President & COO for       is now the tallest building in                                                                                                                                                                          of industrial land, regenerating
                                                                                                                                                                                Twin Towers (the second of which
Brookfield’s UK division, believes       China, is part of this movement                                                                                                                                                                         piecemeal is often not an option. A
                                                                                                                                                                                completes next year).
that the best means of achieving         towards skyscrapers that allow                                                                                                                                                                          small office building constructed in
the staff-friendly skyscraper is         staff to interact, according to the                                                                                                    Other Asian towers completing                                    the midst of redundant warehouses
via a very efficient floor plate.        building’s Marketing Director,                                                                                                         this year include Jakarta’s                                      will struggle to sign a tenant, and the
“Building iconic for the sake of it is   Wendy Yu. “The office floors                                                                                                           Cemindo Tower (which will be the                                 local transport authority is unlikely to
                                                                                                                                            D                                                                                                    add it to their routes. Redevelopment
not sustainable. Offering efficiency     connect with the 21 sky lobbies                                                                                                        tallest building in Indonesia), and
of floor occupation and flexibility      and courtyard gardens, providing                                                                                                       the IB Tower, and the Naza Tower                                 has to be en-masse to get the buy-in
is what tenants are seeking first        people with spaces to interact.                                                                                                        in Kuala Lumpur (these will be                                   from municipal authorities to add
and foremost.” This creates a blank      Amenities like cafés, convenience                                                                                                      the city’s third and fourth highest                              infrastructure, and with architecture
canvas on which the occupier can         stores, ATMs, and entertainment                                                                        E                               skyscrapers, respectively).                                      of a quality that will draw big name
set out a bespoke office that matches    facilities are also distributed                                                                                                                                                                         tenants as anchor pre-lets; which in
                                                                                                                                                                                Over the next two years, Sydney                                  turn persuades other firms to move
their business practices.                throughout the The Shanghai
                                                                                                                                                                                will add to its skyline the                                      to the new district.
                                         Tower.” A super-tall building
                                                                                                                                                                                triple skyscraper International
                                         of 6.2 million sq ft, the sense                                                                                                                                                                         Skyscrapers have the gravitas
                                                                                                                                            F                                   Towers cluster at Barangaroo, a
   BUILDING ICONIC FOR THE SAKE          of community is facilitated by                                                                                                                                                                          and quality of offices that attract
                                                                                                                                                                                major dockside redevelopment.
                                         breaking the tower into several                                                                                                                                                                         Fortune 500-type firms, which
     OF IT IS NOT SUSTAINABLE.                                                                                                                                                  Anchor tenants include HSBC,
                                         vertical communities, each with its                                                                                                                                                                     gives the confidence to other
                                                                                                                                                                                KPMG, PwC and Westpac. The
                                         own atrium.                                                                                    G                                                                                                        potential stakeholders (such as the
                                                                                                                                                                                complex will include more than
Another important factor, according      Shanghai’s skyscraper cluster is                                                                                                                                                                        local government, retail and leisure
                                                                                                                                                                                800 apartments, a hotel, and
to Jepson, is offering an entrance to    found in the Lujiazui CBD, part of                                                                                                                                                                      tenants, and investors) to back a
                                                                                                                                                                                shops, while Renzo Piano has
the building that suits the tenant’s     the city’s Pudong district whose                                                       H                                                                                                                major regeneration scheme. That a
                                                                                                                                                                                been commissioned to design
needs. “At 100 Bishopsgate we have                                                                       J                                                                                                                                       growing number of large companies
                                         futuristic skyline has become                                                                                                          three new residential towers at
the luxury of almost 17,000 sq ft                                                                                    I                                                                                                                           are willing to be that pre-let anchor
                                         symbolic of China’s economic                                                                                                           Barangaroo South.
of reception at ground level, so we                                                                                                                                                                                                              tenant, even if it means moving to
                                         success. In 1993, Pudong was
can offer some tenants their own                                                                                                                                                                                                                 another part of the city, is behind a
                                         largely warehouses and farmland.
identity. We don’t scrimp on the                                                                A                   B                                                                                                                            new wave construction around the
                                         By 2000 the population had
ground floor space”. This brings out                                                            PARIS               FRANKFURT                                                                                                                    world. New York City has several
                                         mushroomed to over 3 million,
                                                                                                                                                                                                                                                 examples of this.
the importance of an appropriate
public realm for skyscrapers, where
                                         before rising above 5 million                          492                 421
                                         at the time of the 2010 census.
                                                                                                C                   D
                                                                                                                                                                                                                                                  NYC’S NEW TOWER CLUSTERS
impressions are often shaped before      Around 40% of people living
the front door is even reached.                                                                 CHICAGO             SYDNEY                                                                                                                       New York is benefiting from the
                                         there originate from elsewhere
                                                                                                                                                                                                                                                 arrival of two new skyscraper
Particularly in London’s EC3             in China. This makes Pudong                            381                 265                                                                                                                          clusters, found in Downtown and
insurance district, utilising towers     a case study in the urgent need
                                                                                                E                   F                                                                                                                            western Midtown.
to raise a firm’s profile has played     for emerging market cities to
                                                                                                LONDON              SHANGHAI                                                                                                                     In Downtown, there is the new
a role in generating office demand.      go skywards to cope with rapid
Swiss Re famously chose The              economic change.                                       246                 245                                                                                                                          World Trade Center complex,
                                                                                                                                                                                                                                                 where 5.3 m sq ft of office space
Gherkin (aka 30 St Mary Axe) in
order to leverage the publicity            TOWERING AMBITIONS                                   G                   H                                                                                                                            has already completed, with a
                                                                                                HONG KONG           NEW YORK
value of being in such an iconic         Inevitably other cities have
building. This set in motion a
domino effect of innovative towers
                                         ambitions to replace the Pudong                        190                 181                                                                                                                          CONTINUED ON                      08-10
                                         towers as the Chinese skyline
in EC3 signing up insurance              photo that appears in foreign                          I                   J                                                                                         The Shanghai Tower is currently
                                                                                                SAN FRANCISCO       SINGAPORE                                                                                         China’s tallest building
tenants, such as The Leadenhall          newspapers. In Shenzen, the Ping
                                                                                                                                                    Hong Kong has the
Building, with its tapering design,      An International Financial Centre
drawing US giant, Aon.                   is under construction and is set to
                                                                                                181                 114                             highest skyscraper office
                                                                                                                                                    rents in the world
SKYSCRAPERS GLOBAL CITIES 2015 REPORT - Knight Frank
GLOBAL      SKYSCRAPERS
       CITIES      2015 REPORT

CONTINUED FROM                  06-07    a tenant in London’s The Shard,                                                                                                               La Défense in Paris
                                                                                                                                                                                                                                                              Burj Khalifa will pass the

                                                                                                                                                                                                                                                                                                                                                                               08-10
                                                                                  The Shard, London                                                                                    combines offices, homes,
further 5.3 m sq ft to follow. This      further demonstrating the media/             Bridge Quarter                                                                                                                                                          title of the world’s tallest
                                                                                                                                                                                       hotels, shopping and
is complemented by 565,000 sq ft         creative interest in towers.                                                                                                                  culture in an iconic                                                   building to Kingdom Tower

                                                                                                                                                                                                                                                                                                                                                                               TOWERING ABOVE THE REST
                                                                                                                                                                                       skyscraper district.                                                   in Jeddah in 2019
of retail at Brookfield Place, and
                                          MIXED-USE MOVING UP THE AGENDA
Westfield’s World Trade Retail.
                                         Increasingly, mixed-use is moving
The new office stock is coinciding                                                                                                                                                                                                                                                                                                   With a population of
                                         up the tower agenda – indeed
with a transformation of the                                                                                                                                                                                                                                                                                                         15 million, Shenzen is
                                         the majority of skyscrapers in
Downtown market, with more                                                                                                                                                                                                                                                                                                           embracing tall buildings
                                         both Manhattan and London’s
technology and creative firms
                                         future development pipeline are
moving in. Conde Nast, the publisher
                                         residential. For instance, in London
of Vogue, is the anchor tenant for
                                         a residential tower cluster is being
One World Trade Center. Other
                                         developed at Nine Elms, thanks to
firms signed up include ad agency
                                         a new underground rail line which
KiDS Creative, and tech companies
                                         will terminate at the mixed-use
High 5 Games, Tinypass, and xAd,
                                         redevelopment of the Battersea
demonstrating the changing tenant
                                         Power Station site.
profile of a district once associated
with finance.
Turning to Midtown, near Penn              BEYOND THE LOCAL POPULATION
Station we are seeing a new cluster        AND WORKFORCE, AN ESTIMATED
of skyscrapers being developed.            SIX MILLION PEOPLE EACH YEAR                                                                                                                                                                                                                                                              growth. This includes delivering
This includes the 28 acre Hudson                                                                       perception than reality, as it tends
                                                 VISIT LA DÉFENSE.                                     to be the upper floors, above
                                                                                                                                                                                                                                                                                                                                     more homes and additional
Yards district, which is being                                                                                                                                                                                                                                                                                                       business space. Particularly, in
developed by Oxford Properties                                                                         the skyline that command the
                                                                                                                                                                                                                                                                                                                                     emerging markets this has led to a
and Related Companies. This                                                                            premium office rents – the lower
                                         La Défense in Paris shows how                                                                                                                                                                                                                                                               drive to build towers that are ever
consists of four commercial towers                                                                     floors tend to let on standard prime
                                         skyscrapers when set in a well-                                                                                                                                                                                                                                                             bigger. However, this could change
and two residential towers. It is                                                                      rents. The premium for views can
                                         designed public realm can create a                                                                                                                                                                                                                                                          as these cities reach maturity.
complimented by Brookfield’s                                                                           vary from 15-20% in the City of
                                         destination in its own right. Beyond
neighbouring Manhattan West                                                                            London and Hong Kong island, to                                                                                                                                                                                               In western cities when skyscrapers
                                         the local population and workforce,
project of 5.8 m sq ft, which includes                                                                 nearly double average prime rents                                                                                                                                                                                             are developed it is common
                                         an estimated six million people                                                                                                                                                                                                                     long-term obligations, the longevity
                                                                                                       in Midtown Manhattan.                                                                                                      As an island city,                                                                                 practice to pre-let a large share
two skyscrapers of 67 storeys each.      each year visit La Défense for non-                                                                                                                                                      skyscrapers have proved                                    of skyscrapers is also an attraction.
                                                                                                                                                                                                                                                                                                                                     of the commercial space either
                                         business reasons. A survey of visitors                                                                                                                                                   ideal for accommodating                                    In New York, art deco towers from
As with the new World Trade                                                                             NEW WAVE OF INVESTORS                                                                                                     Singapore’s rapid                                                                                  before construction starts, or early
                                         by the local tourist board found                                                                                                                                                                                                                    the 1930s still operate as modern
Center, the tenants already signed                                                                                                                                                                                                economic growth                                                                                    on in the development process.
                                         that half of all non-business visitors                        Skyscrapers are not just popular                                                                                                                                                      office buildings. The prospect of a
up for Hudson Yards are not from                                                                                                                                                                                                                                                                                                     This is because towers in the
                                         were there to shop, and a third were                          with tenants, as they are also in                                                                                                                                                     building that gains almost timeless
the financial and professional                                                                                                                                                                                                                                                                                                       west, which are unlikely to be
                                         tourists from outside Paris.                                  vogue with real estate investors.                                                                                                                                                     appeal is of interest to an investor
industries who previously                                                                                                                                                                                                                                                                                                            backed by government money, are
                                                                                                       This is the result of more mega-                                                                                                                                                      who must think very long-term.
dominated Manhattan skyscrapers.         La Défense is a successful example                                                                                                                                                                                                                                                          shaped principally by commercial
Future occupiers will include,                                                                         funds targeting property in recent
                                         of mixing living with work, with its                                                                                                                                                                                                                As well as the mega funds               decisions. This has been less of
CNN, L’Oreal, Time Warner, and                                                                         years, sometimes sovereign wealth
                                         25,000 local residents . The proposed                                                                                                                                                                                                               mentioned above, we are even            a factor in emerging markets
Coach (a luxury goods firm).                                                                           funds, but also national pension       however skyscrapers allow sums           increasing interest in real estate as an
                                         Foster and Partners designed                                                                                                                                                                                                                        seeing interest in skyscrapers          cities, where governments have
                                                                                                       schemes and global private equity      over the billion dollar mark to be       alternative to bonds and equities.
This transition of skyscrapers           Hermitage Plaza is characteristic of                                                                                                                                                                                                                from private investors; as shown        often wanted to encourage large
                                                                                                       funds. Recent examples include         invested in a single deal.
away from finance and towards            this mixed-use approach. The 3.4 m                                                                                                            Another attraction of skyscrapers                                                                     by Brazil’s Safra family buying 30      amounts of modern business space
                                                                                                       Blackstone purchasing 1740
creative industry occupiers is           sq ft project (including twin towers                                                                 Changes in global capital markets are    relates to the diversity of the                                                                       St Mary Axe. This could suggest a       to be developed to accelerate the
                                                                                                       Broadway and the Park Avenue
seen elsewhere in the world. In          of 85 and 86 floors) will incorporate                                                                shaping the new trend, as the mega-      tenancy schedule found in                                                                             new club of skyscraper investors is     modernisation of their cities.
                                                                                                       Tower in New York for a combined                                                many towers. Multiple tenants
San Francisco towers are under           offices, luxury homes, a five star                                                                   funds have traditionally been major                                                                                                            emerging where the status factors
                                                                                                       $1.1 bn, while in London the Qatari                                                                                                                                                                                           With economic maturity we could
construction to house technology         hotel, conference centre, and high-                                                                  investors in sovereign bonds. Years of   with leases expiring at different                                                                     found in leasing tower space are
                                                                                                       Investment Authority recently                                                                                                                                                                                                 see more cities in Asia choosing not
jobs moving into the city from low-      end retail.                                                                                          Quantitative Easing (QE) have pushed     times increases exposure to the                                                                       similarly applied to owning one.
                                                                                                       combined with Brookfield to buy                                                                                                                                                                                               to build very big towers in the future,
rise Silicon Valley. Cloud computing                                                                                                          bond yields to record lows for some of   rental cycle, creating plenty of
                                         The resounding message from our                                                                                                                                                                                                                                                             but adopting the western model as
firm, Salesforce has pre-let a new
                                                                                                       the majority shareholding in
                                                                                                                                              the most popular triple A and double     opportunity to asset manage a                                                                          SKYSCRAPERS AND THE FUTURE
                                         study of the global skyscrapers                               developer Canary Wharf Group.                                                                                                                                                                                                 the need to modernise recedes. The
skyscraper as its headquarters in                                                                                                             A sovereigns, making real estate         tower to exploit changes in the
                                         market is that they are associated                                                                                                                                                           The skyline of Pudong                                  Turning to the future, skyscrapers      drive for super tall buildings may
San Francisco, and in London they                                                                      For funds which have very large        yields comparatively attractive. QE      leasing market.                                      in Shanghai has
                                         with exclusivity, whether it be for                                                                                                                                                                                                                 offer many opportunities for            give way to a world where towers are
                                                                                                                                                                                                                                       become symbolic of
also occupy space in The Heron           commercial or residential use. This                           amounts of money to deploy sub-        has also encouraged many funds to        Particularly for pension funds, who                                                                   crowded inner cities to address         less concerned with height and more
                                                                                                                                                                                                                                      China’s emergence as
Tower. Similarly, Al-Jazeera are         can be more of a psychological                                $100 m deals can be too granular,      diversify their investment portfolios,   must match income streams with                    an economic giant                                   problems of how to accommodate          with the financial bottom line.
SKYSCRAPERS GLOBAL CITIES 2015 REPORT - Knight Frank
GLOBAL SKYSCRAPERS
    GLOBAL   SKYSCRAPERS
     CITIES 2015
    CITIES   2015REPORT
                  REPORT

IN 2009 THERE WERE

NINETEEN
                                   SKYSCRAPERS IN
                                   THE WORLD WITH
                                   H E I G H T S O F OV E R
                                   ONE THOUSAND FEET

                           SEVENTY
TODAY
THERE ARE

                              NINE
40%28%
O F W H I C H A R E I N C H I NA            OF WHICH ARE IN THE UAE

                                                                                           Source:
                                                                   Emporis, Knight Frank Research,
                                                              Newmark Grubb Knight Frank Research
                                                                Note: based on completed buildings
SKYSCRAPERS GLOBAL CITIES 2015 REPORT - Knight Frank
GLOBAL      SKYSCRAPERS
        CITIES      2015 REPORT

SKYSCRAPER

                                                                                                                                                                                                                                                                                                                                                                                                              12-14
                                                                                                                                                            $150.00   $124.00 $108.75 $97.00 $94.25 $91.75 $90.00 $73.00 $68.75                                                                       $67.50     $65.00      $61.00         $58.25    $51.50         $43.50

                                                                                                                                                                                                                                                                                                                                                                                                              SKYSCRAPER INDEX
                                                                                                                                                                                                                                                                                                                                                                                  $37.75         $33.25

INDEX                                                                                              Skyscraper Prime Office Rents
                                                                                                   (USD/sq ft/yr)
                                                                                                                                   $250.50

Hong Kong remains the world’s leading city for
skyscrapers, but New York is closing fast. While Asia
may be building apace, economic recovery in the US
is buoying demand for towers from investors and
tenants in the big North American cities.

Knight Frank’s latest skyscraper          growth for tower space has buoyed
index has been expanded to take           New York, where skyscrapers are
into account additional measures          proving popular with the city’s fast
of a city’s significance as a centre of   expanding digital and creative firms.
high rise business and living. The
                                          It is probably no coincidence
index now assigns scores to each
                                          that the cities ranked first and
city based on a range of indicators,
                                          second have their CBDs on islands.
including skyscraper office rents
                                          Skyscrapers are the ideal solution
and yields, the spread offered by
                                          for space constrained CBDs,
investment yields compared to
                                          particularly in an era when cities
national bonds, the number of high
                                          are repopulating, as towers are able
rises built, and growth prospects
                                          to maximise the potential space
for the city.
                                          that can be delivered on a site.
The previous index had Hong                                                                                                             HONG KONG        NEW YORK             TOKYO           LONDON   SAN FRANCISCO        SINGAPORE       SYDNEY          MOSCOW     LOS ANGELES        SHANGHAI     BEIJING     CHICAGO        PARIS   FRANKFURT    MUMBAI             DUBAI   KUALA LUMPUR        SEOUL
Kong in the number one slot with
a huge lead. Interestingly, despite                                                                                                     SCOR ES
widening the criteria assessed,
                                          Skyscraper Prime Office Rents:
Hong Kong is still top of the table,      Source: Knight Frank Research, Newmark Grubb Knight Frank Research,                       1                2                 3               4                5               6               7            8                9              10               11          12         13           14          15             16            17            18
confirming that on a range of             Sumitomo Mitsui Trust Research Institute
                                          *Illustration not to scale
measures it is the world’s leading                                                                                                 HONG KONG        NEW YORK          TOKYO           LONDON           SAN FRANCISCO   LOS ANGELES      SYDNEY       CHICAGO         SHANGHAI        SINGAPORE       FRANKFURT   SEOUL       PARIS        BEIJING     KUALA LUMPUR   DUBAI         MUMBAI        MOSCOW
skyscraper city. However, the lead        Skyscraper Index:
                                                                                                                                   131.4            126.6             116.8           112.3            112.2           102.9            100.2        98.5            95.3            94              93.6        90.1        84.8         75.6        64.4           62.6          55.2          50.8
over the competition has narrowed.        Source: Knight Frank Research, Newmark Grubb Knight Frank Research,
                                          Sumitomo Mitsui Trust Research Institute, The IMF, Thomson Reuters,
In particular, stronger rental            JP Morgan Chase
SKYSCRAPERS GLOBAL CITIES 2015 REPORT - Knight Frank
GLOBAL   SKYSCRAPERS
      CITIES   2015 REPORT

WEST SIDE STORY  NEW YORK’S NEXT SKYSCRAPER CLUSTER

                                                                                                                                                                         Images:
                                                                                                                                                                     Hudson Yards

                                                      10 HUDSON YARDS                     55 HUDSON YARDS                         30 HUDSON YARDS

                                                      THE RELATED COMPANIES               MITSUI FUDOSAN, THE RELATED COMPANIES   THE RELATED COMPANIES

                                                      1,700,000 SQ FT                     1,300,000 SQ FT                         2,600,000 SQ FT

                                                      2015                                2017                                    2018
                                                      UNDER CONSTRUCTION                  PLANNED                                 PLANNED

                                                      52 STORIES                          50 STORIES                              84 STORIES

                                                      SIGNED: COACH, L’ORÉAL, SAP,        DESIGNED FOR LAW FIRMS                  SIGNED: TIME WARNER
                                                      VAYNERMEDIA                                                                 (HBO, CNN, & WARNER BROS.)

                                                      5 MANHATTAN WEST 450 WEST 33RD ST   3 HUDSON BOULEVARD                      509 WEST 34TH ST

                                                      BROOKFIELD PROPERTIES               THE MOINIAN GROUP                       TISHMAN SPEYER

                                                      1,800,000 SQ FT                     1,800,000 SQ FT                         2,850,000 SQ FT

                                                      2016 (RENOVATION)                   2018-2019                               2019
                                                      PLANNED                             UNDER CONSTRUCTION                      PLANNED

                                                      16 STORIES                          66 STORIES                              61 STORIES

                                                      SIGNED: CHASE DIGITAL MEDIA         MIXED-USE DEVELOPMENT                   DEVELOPMENT PLANS
                                                                                          POSSIBLE                                ANNOUNCED JULY 2014

  In Manhattan’s                                       50 HUDSON YARDS                    1 & 2 MANHATTAN WEST

  Far West Side an                                    THE RELATED COMPANIES               BROOKFIELD PROPERTIES

  ambitious new                                       2,300,000 SQ FT                     4,000,000 SQ FT

  district is under                                   2020                                TBD
  construction, with                                  PLANNED                             PLANNED

  world famous                                        62 STORIES                          67 STORIES EACH

  companies signed                                    PROJECT IN EARLY STAGES
                                                      OF PLANNING
                                                                                          SKADDEN, ARPS
                                                                                          SIGNED: AN LOI
  as anchor tenants.                                                                                                                                                       Source:
                                                                                                                                               Newmark Grubb Knight Frank Research
SKYSCRAPERS GLOBAL CITIES 2015 REPORT - Knight Frank
5
        GLOBAL       SKYSCRAPERS
        CITIES       2015 REPORT
                                                                                               03

                               FUTURE

                                                                                                                                                                       16-17
                                                                                                                                                                       5 FUTURE TRENDS
                               TRENDS
                                When a city grows it can do so either laterally by
                                spreading out, or vertically by building skywards
                                                                                                         03                  BUSINESS CLUSTERS
                                                                                                                         The rise of the internet and electronic
                                                                                                                      trading was widely expected to break-up
                                                                                                                   business clusters, but in most instances this has
                                                                                                               not been the case. Indeed the new wave of digital
                                                                                                            companies has shown a strong propensity to cluster
                                                                                                         in dense urban areas, whether it be SOMA in San
                                                                                                         Francisco or Midtown South in New York, suggesting
                                thus converting air into ‘land’. Below we identify                       clusters could be set to grow in significance in a hi-tech
                                five trends that will encourage the Global Cities                        future. Going skywards helps to keep a cluster local. It is
                                to go upwards, making skyscrapers an essential                           noteworthy that the most enduring business cluster in
                                component of urban growth.                                               London, the insurance firms in the EC3 post code, is
                                                                                                         where we have seen a raft of new skyscrapers.

                                                                                     01                  04                  LIMITING SPRAWL
                                                                                                                          As cities grow they typically sprawl

01                    NEW TECHNOLOGY
                  As buildings rise higher, new technologies
                                                                                                                       outwards, creating problems of extending
                                                                                                                   transport networks, building on green fields,
              are emerging to make this both possible and                                                       and imposing longer commutes on staff. It can also
          cost effective. With steel elevator cables, going                                                 create political and municipal funding problems if
       much above 500 metres becomes problematic as                                                      cities struggle to ‘adopt’ the suburban towns around them
   both weight and energy consumption increase. Finnish                                                  – a factor in Detroit’s recent bankruptcy. Skyscrapers
company, Kone, have developed a new carbon fibre cable                                                   reduce the need to sprawl. More concentrated, vertical
                                                                                                         cities would allow transport networks to focus on
which can be as long as one kilometre while using less
energy to hoist elevators, as it is a fraction of the weight of                                     04   maximising local capacity and efficiency at peak times
steel. Thyssen-Krupp are looking into an elevator that has                                               rather than extending lines further into the surrounding
no cable. It is based on magnet technology which would                                                   countryside. Reducing sprawl also increases eco-
eliminate the need for a counterweight, freeing up                                                       commuting like jogging or cycling to work.
internal space for other uses.

02                    LIVING IN THE CITY                                      02                         05                  THE COMMUNITY CITY
                                                                                                                           While media attention often falls on the
                Migration, gentrification, and growing                                                                 skyline, the ordinary citizen encounters
             economic opportunities have brought                                                                    the city at ground level. Building offices and
         about rapid population growth in cities across                                                        homes skywards frees up the ground floor
      the globe. The UN is predicting the number of                                                         frontage, and indeed basements and first floors, for
   mega cities (those with a population of over 10
million) to jump from 28 currently to 41 by 2030.
                                                                                          05             retail, leisure and other amenities. Once commercial
                                                                                                         space is extending upwards not laterally, public areas
India’s urban population is forecast to nearly double to                                                 interspersed with art and sculptures can be created
814 million by 2050. For emerging markets cities,                                                        between tower concentrations. These can be used for
skyscrapers offer a means of delivering large swathes of                                                 markets and cultural events, to improve quality of life.
homes and business space in response to rapid                                                            With towers allowing more people to live in the centre,
economic and population growth. For western cities                                                       the CBD no longer becomes a ghost town outside of
towers offer a means of matching the popularity of                                                       office hours, encouraging a weekend and evening
living near work in densely developed inner cities.                                                      economy of shopping, culture and tourism.
SKYSCRAPERS GLOBAL CITIES 2015 REPORT - Knight Frank
GLOBAL      SKYSCRAPERS
        CITIES      2015 REPORT

ABOUT

                                                                                                                                                                                                                                                                                        18-19
                                                                                                                                                                                                                                                                                        ABOUT THE GROUP
                                                                                                                         C O N T AC T

THE GROUP
                                                                                                                         SKYSCRAPERS 2015 REPORT BY KNIGHT FRANK
                                                                                                                         AND NEWMARK GRUBB KNIGHT FRANK

                                                                                                                         JOHN SNOW, HEAD OF COMMERCIAL                           JONATHAN MAZUR,
                                                                                                                         KNIGHT FRANK                                            MANAGING DIRECTOR OF RESEARCH
                                                                                                                         +44 20 7861 1190                                        NEWMARK GRUBB KNIGHT FRANK
                                                                                                                         JOHN.SNOW@KNIGHTFRANK.COM                               +1 212 372 2154
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                                                                                                                         JAMES D. KUHN, PRESIDENT
                                                                                                                         NEWMARK GRUBB KNIGHT FRANK                              NICHOLAS HOLT, HEAD OF RESEARCH
Knight Frank and Newmark Grubb Knight Frank,                                                                             +1 212 372 2200
                                                                                                                         JKUHN@NGKF.COM
                                                                                                                                                                                 KNIGHT FRANK ASIA PACIFIC
                                                                                                                                                                                 +65 6429 3595
together, is a thoroughly integrated market-leading                                                                      JAMES ROBERTS, CHIEF ECONOMIST
                                                                                                                                                                                 NICHOLAS.HOLT@ASIA.KNIGHTFRANK.COM

global real estate advisor.                                                                                              KNIGHT FRANK
                                                                                                                         +44 20 7861 1239
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                                                                                                                                                                                 KNIGHT FRANK GREATER CHINA
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                                                                                                                                                                                 DAVID.JI@HK.KNIGHTFRANK.COM
                                                                                                                         LIAM BAILEY,
                                                                                                                         GLOBAL HEAD OF RESEARCH                                 MATT WHITBY, HEAD OF RESEARCH
                                                                                                                         KNIGHT FRANK                                            KNIGHT FRANK AUSTRALIA
                                                                                                                         +44 20 7861 5133                                        +61 2 9036 6616
                                                                                                                         LIAM.BAILEY@KNIGHTFRANK.COM                             MATT.WHITBY@AU.KNIGHTFRANK.COM

The combined group have                   strategy, leasing, workplace             highly developed and enviable
more than 12,500 property                 consultancy, tenant representation       Valuations business who can
professionals, with more than             and project management.                  manage the valuation of a portfolio
370 offices around the world; this                                                 of global assets from a single
                                          Our Global Capital Markets
global commercial and residential                                                  location whilst working closely       C AV E AT S
                                          teams operate from five core
capability allows us unrivalled                                                    with our teams at a local level.
                                          regions, the UK, Europe, Asia,
access to wealth, properties and
                                          Middle-East and The Americas.            Our track record of trust and         This report is published for general information        Many external sources regarding Skyscrapers      or damage resultant from the contents of this
occupiers in 55 countries.
                                          We have unrivalled access                integrity means we, together, are     only and not to be relied upon in any way.              have been consulted for this report, but         forecast. As a general forecast, this material
Our integrated office network             to institutional, corporate,             becoming increasingly recognised      Although high standards have been used in the           the information has been cross referenced        does not necessarily represent the view of
enables us to offer clients a dedicated   sovereign and private wealth.                                                  preparation of the information, analysis, views         against Knight Frank and Newmark Grubb           Knight Frank in relation to particular properties
                                                                                   as the advisor of choice in the
service from our headquarters in                                                                                         and projections presented in this report, no            Knight Frank’s proprietary knowledge, and        or projects.
                                          Our Office Leasing teams are             global real estate market. With       responsibility or liability whatsoever can be           information kindly provided by several firms
London and New York City. Together,                                                our best-in-class advice, and
                                          appointed on some of the most high                                             accepted by Knight Frank LLP for any loss or            in the development sector regarding their
we are strengthened by the specialist                                              ability to deliver seamlessly in      damage resultant from any use of, reliance on or        specific skyscraper projects. This explains
desks we have created in these cities,    profile buildings around the world,
                                                                                   collaboration, we set ourselves       reference to the contents of this document.             any disparities between data in the report and
devoted to further enhancing our          including The Shard in London,
                                                                                   apart in the global market place.     As a general report, this material does not             that quoted elsewhere.
global client relationships.              Gateway in Sydney, SRE Finance
                                                                                                                         necessarily represent the view of Knight Frank                                                           COPYRIGHT:
                                          Centre in Shanghai and the Empire        The combination of our people,        LLP in relation to particular properties or projects.
We have a highly developed Global                                                                                                                                                                                                 @ Knight Frank LLP 2015
                                          State Building in New York. The          network, research and technology
Corporate Services business                                                                                              Within this report all figures quoted for 2014 are      FORECAST CAVEAT:                                 Reproduction of this report in whole or in part
                                          strength and depth of our Leasing        has helped us grow our enviable       year-end.
with hubs in London, New York                                                                                                                                                    Forecasting is an inherently uncertain           is not allowed without prior written approval of
                                          and Tenant Representation                track record and, for that reason,                                                                                                             Knight Frank LLP to the form and content within
and Hong Kong. Working with                                                                                              This report was largely written in March 2015           activity and subject to unforeseen changes
                                          business enables us to offer clients a   clients come back to us time and      based on available data and drawing from the                                                             which it appears.
occupiers of commercial premises                                                                                                                                                 in the external environment. Although
                                          truly global service.                    time again.                           business news and market sentiment at the               high standards have been used in the             Knight Frank LLP is a limited liability partnership
our teams are able to offer an                                                                                           time; then going to press in early April 2015.
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                                          Markets, Tenant Representation                                                 Rent figures quoted for cities in the Americas,
globally, regionally and at a country                                              uncompromising standards, our         are prime average asking rents. Rents                   legal responsibility can be accepted by Knight   Street, London, W1U 8AN, where you may look at
or city level. We excel at portfolio      and Leasing teams we have a              clients deserve nothing less.         elsewhere are quoted normal prime achieved.             Frank Research or Knight Frank for any loss      a list of members’ names.
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     CITIES 2015 REPORT
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