After several years of holding the title “world’s highest office rents,” Hong Kong’s position was usurped by London in 2007, according to the new 2008 Global Market Report from real estate services firm NAI Global. Rental rates in the Mayfair submarket in London’s West End reached $265.31 per sq. ft. last year, an increase of more than $40 per sq. ft. over the past 12 months.

In the United States, New York City, San Francisco and Boston topped the list of priciest office markets. Local NAI market experts in more than 200 property markets around the world contributed to the study, which is now in its 22nd year of publication.

“Image conscious investment managers are driving up rental rates in Mayfair, where peak rents are almost double the highest office rents in any other part of the city,” says NAI Global president and CEO Jeffrey M. Finn. “Hong Kong tenants have had to contend with sky-high rental rates for several years now, but in London, New York City, San Francisco, Moscow and a few other major cities, the increases registered in 2007 pose a real challenge for companies with expiring leases that were originally signed in much more favorable market conditions.”

Hong Kong still posted a strong second in the global race, with rents reaching $263.20 per sq. ft. Hong Kong’s Class-A rents climbed some 25% to 30% marketwide, reflecting robust conditions.

According to Finn, the most expensive office markets share many of the same characteristics, including strong local and national economies and significant supply constraints. For instance, New York City’s Midtown market posted a strong third-place showing, with peak rents of $225 per sq. ft.

In the U.S. rankings, San Francisco sits in a distant second, with peak rents less than half of Midtown’s at $110 per sq. ft. downtown, while Boston ranks third, with top rents of $90 per sq. ft. in the Financial District.

NAI also ranked the top suburban U.S. office markets with San Mateo, Calif., topping the charts with peak rents of $156 per sq. ft., nearly four times the effective average rents for Class-A space in the market. San Mateo County is home to San Francisco International Airport and some of the world’s leading technology companies.

Santa Clara County (Silicon Valley) finished a distant second with top rents of $81 per sq. ft., followed by Los Angeles at $75 per sq. ft. Overall, California markets claimed seven of the 10 priciest suburban markets nationally.