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<strong>CBRE</strong> Global In-Sights<br />
Office Leasing<br />
Around the World<br />
Presented by:<br />
George Relyea, First Vice President,<br />
Global Corporate Services, <strong>CBRE</strong><br />
Host:<br />
Raymond Torto, Global Chief Economist,<br />
Global Research and Consulting, <strong>CBRE</strong><br />
September 2012<br />
The Global In-Sights podcasts <strong>PDF</strong> presentations are available for download on<br />
www.cbre.<strong>com</strong>/EN/Research/pages/globalinsights.aspx.<br />
Podcasts are also available through iTunes under podcasts and on the <strong>CBRE</strong> IPhone app.<br />
Global Research and Consulting
George Relyea<br />
First Vice President, Global Corporate Services,<br />
<strong>CBRE</strong><br />
George is a First Vice President with the <strong>CBRE</strong><br />
office in New York. He is also the founder and<br />
current editor <strong>CBRE</strong>’s Global Office Occupier<br />
Guide. The guide outlines leasing practices in<br />
57 countries and is used by <strong>CBRE</strong> and its<br />
clients worldwide. It is now available online at<br />
http://portal.cbre.eu/GOOG_WEB/homepage.do<br />
and on the <strong>CBRE</strong> IPhone and IPad apps. With<br />
over 20 years of <strong>com</strong>mercial real estate<br />
experience, George is an active leasing broker<br />
in New York City and Alliance Director for<br />
<strong>CBRE</strong>’s Textron account.<br />
george.relyea@cbre.<strong>com</strong><br />
Global Research and Consulting<br />
<strong>CBRE</strong> | Page 2<br />
George Relyea
Raymond Torto, Ph.D., CRE<br />
Global Chief Economist, Global Research and<br />
Consulting, <strong>CBRE</strong><br />
Raymond Torto is the <strong>CBRE</strong> Global Chief Economist<br />
and serves as the Company’s primary spokesperson<br />
on the global economy and <strong>com</strong>mercial real estate<br />
markets. Dr. Torto is also the Executive Managing<br />
Director of <strong>CBRE</strong> Global Research and Consulting<br />
<strong>CBRE</strong>’s worldwide team of <strong>com</strong>mercial real estate<br />
market analysts and economists.<br />
Dr. Torto is active in many real estate organizations<br />
including service as Treasurer, Vice Chairman and<br />
Chairman of Pension Real Estate Association<br />
(PREA) and as a Director of the PREA Board. He is<br />
also a Senior Fellow of the Real Estate Research<br />
Institute and a Fellow of the Homer Hoyt Advanced<br />
Studies Institute as well as a member of Urban Land<br />
Institute, American Real Estate Association and a<br />
Counselor of Real Estate. Dr. Torto is a visiting<br />
faculty member at Harvard School of Design.<br />
raymond.torto@cbre.<strong>com</strong><br />
Global Research and Consulting<br />
<strong>CBRE</strong> | Page 3<br />
Raymond Torto
1. Term 6. Rent Escalation<br />
2. Breaks 7. Free Rent<br />
3. Renewals 8. Security<br />
4. Subleasing 9. Who Pays Fit-Out?<br />
5. Rent Basis 10. Who Pays Broker?<br />
Global Research and Consulting<br />
<strong>CBRE</strong> | Page 4<br />
10 Key Variables
Norm: Fixed 3–10 years<br />
Short: 3 ± years<br />
• Emerging markets<br />
• Where tenant can break<br />
• Multiple options to renew<br />
• Subleasing rare<br />
• No fit-out by landlord<br />
• Minimal free rent<br />
Long: 15+ years<br />
• Established markets<br />
• Break options or subleasing<br />
• High free rent<br />
• Full Repairing & Insuring (UK, Ireland)<br />
Indefinite<br />
• Until notice by tenant or LL<br />
• Normally begin w fixed term<br />
Global Research and Consulting<br />
<strong>CBRE</strong> | Page 5<br />
Austria<br />
UK Ireland<br />
1. Term<br />
Asia South America<br />
Denmark Finland Poland
Norm: Negotiable<br />
• Break options <strong>com</strong>mon with long leases<br />
• Rare with short leases<br />
3/6/9<br />
• 9-year leases<br />
• Tenant break end 3 rd & 6 th yr<br />
Statutory Break Rights<br />
Traditional Break Rights<br />
Global Research and Consulting<br />
<strong>CBRE</strong> | Page 6<br />
Argentina Brazil Greece<br />
2. Break<br />
France Luxembourg Belgium Morocco<br />
Japan (traditional leases)
Norm: Negotiable<br />
Common with short leases<br />
Statutory<br />
Automatic<br />
Global Research and Consulting<br />
<strong>CBRE</strong> | Page 7<br />
France<br />
France<br />
Italy Brazil<br />
Parties cannot Waive<br />
Sweden UAE Morocco<br />
India: 3+3+3<br />
3. Renewal<br />
Belgium Ireland<br />
Parties can Waive<br />
Japan<br />
(traditional leases)
Common<br />
• Where leases long<br />
• Where tenant cannot break<br />
Rare<br />
• Where leases short<br />
• Where tenant<br />
can break<br />
Global Research and Consulting<br />
<strong>CBRE</strong> | Page 8<br />
South America<br />
4. Subleasing<br />
North America Pacific Most EMEA<br />
Asia<br />
Bahrain Turkey<br />
France Austria Poland Greece Morocco
Norm: Net + Service Charge(s)<br />
• Property tax: tenant pays or included in service charge<br />
Net or Gross<br />
US<br />
(multi-tenant)<br />
Gross<br />
Global Research and Consulting<br />
<strong>CBRE</strong> | Page 9<br />
Finland<br />
(multi-tenant)<br />
5. Rent Basis<br />
S Africa<br />
(multi-tenant) Australia China Japan<br />
NYC Malaysia Thailand Singapore
Norm: Indexed<br />
Exceptions<br />
*Every 5 yrs, Upward Only<br />
Global Research and Consulting<br />
<strong>CBRE</strong> | Page 10<br />
• Review to market<br />
• Fixed during term<br />
• Negotiated increases<br />
• Tax & op esc (gross)<br />
6. Escalation<br />
Most Latin America Most Europe Rare Asia<br />
UK* Ireland* Argentina<br />
Hong Kong (net) Singapore (gross)<br />
USA Canada China India<br />
USA Canada Finland Japan
Norm: Some<br />
None<br />
Fit-out only<br />
• Short leases<br />
Fit-out + Incentive<br />
• Longer leases<br />
High<br />
• Longest leases<br />
Global Research and Consulting<br />
<strong>CBRE</strong> | Page 11<br />
N America Europe<br />
7. Free Rent<br />
Chile Denmark Finland Norway<br />
Asia Latin America<br />
UK Ireland New Zealand
Norm: 3 mo ±<br />
• Often w service charge<br />
• Cash or bank guarantee<br />
• Often + parent <strong>com</strong>pany guarantee<br />
Low 0–2 months<br />
High: 6 mo +<br />
Global Research and Consulting<br />
<strong>CBRE</strong> | Page 12<br />
8. Security<br />
Ireland 0 Argentina Chile Colombia Bahrain<br />
Greece Kazakh Russia Ukraine UAE<br />
Japan 10–12 India 6–10 Belgium 6 Luxemb 6 Portugal 6
Norm: Tenant<br />
• All Latin America & Asia<br />
Negotiable<br />
Global Research and Consulting<br />
<strong>CBRE</strong> | Page 13<br />
9. Who Pays Fit-out?<br />
USA Canada Czech Rep France Greece Germany<br />
Russia Serbia Sweden UAE Australia India<br />
Landlord<br />
New York Austria Denmark Norway Hungary Israel<br />
S Africa Poland
Americas: Landlord<br />
Global Research and Consulting<br />
<strong>CBRE</strong> | Page 14<br />
• Except: Argentina, Brazil, Chile<br />
EMEA: Tenant<br />
• Except: Norway, Bahrain<br />
Asia: 50-50<br />
• Landlord or both: India<br />
• Landlord: China & HK<br />
10. Who Pays Tenant Broker?
George Relyea<br />
First Vice President, Global Corporate Services,<br />
<strong>CBRE</strong><br />
George is a First Vice President with the <strong>CBRE</strong><br />
office in New York. He is also the founder and<br />
current editor <strong>CBRE</strong>’s Global Office Occupier<br />
Guide. The guide outlines leasing practices in<br />
57 countries and is used by <strong>CBRE</strong> and its<br />
clients worldwide. It is now available online at<br />
http://portal.cbre.eu/GOOG_WEB/homepage.do<br />
and on the <strong>CBRE</strong> IPhone and IPad apps. With<br />
over 20 years of <strong>com</strong>mercial real estate<br />
experience, George is an active leasing broker<br />
in New York City and Alliance Director for<br />
<strong>CBRE</strong>’s Textron account.<br />
george.relyea@cbre.<strong>com</strong><br />
Global Research and Consulting<br />
<strong>CBRE</strong> | Page 15<br />
George Relyea
Raymond Torto, Ph.D., CRE<br />
Global Chief Economist, Global Research and<br />
Consulting, <strong>CBRE</strong><br />
Raymond Torto is the <strong>CBRE</strong> Global Chief Economist<br />
and serves as the Company’s primary spokesperson<br />
on the global economy and <strong>com</strong>mercial real estate<br />
markets. Dr. Torto is also the Executive Managing<br />
Director of <strong>CBRE</strong> Global Research and Consulting<br />
<strong>CBRE</strong>’s worldwide team of <strong>com</strong>mercial real estate<br />
market analysts and economists.<br />
Dr. Torto is active in many real estate organizations<br />
including service as Treasurer, Vice Chairman and<br />
Chairman of Pension Real Estate Association<br />
(PREA) and as a Director of the PREA Board. He is<br />
also a Senior Fellow of the Real Estate Research<br />
Institute and a Fellow of the Homer Hoyt Advanced<br />
Studies Institute as well as a member of Urban Land<br />
Institute, American Real Estate Association and a<br />
Counselor of Real Estate. Dr. Torto is a visiting<br />
faculty member at Harvard School of Design.<br />
raymond.torto@cbre.<strong>com</strong><br />
Global Research and Consulting<br />
<strong>CBRE</strong> | Page 16<br />
Raymond Torto
<strong>CBRE</strong> Global In-Sights<br />
Office Leasing<br />
Around the World<br />
Presented by:<br />
George Relyea, First Vice President,<br />
Global Corporate Services, <strong>CBRE</strong><br />
Host:<br />
Raymond Torto, Global Chief Economist,<br />
Global Research and Consulting, <strong>CBRE</strong><br />
September 2012<br />
The Global In-Sights podcasts <strong>PDF</strong> presentations are available for download on<br />
www.cbre.<strong>com</strong>/EN/Research/pages/globalinsights.aspx.<br />
Podcasts are also available through iTunes under podcasts and on the <strong>CBRE</strong> IPhone app.<br />
Global Research and Consulting
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