A trio of international cities beat out New York for the title of most expensive office location. London, Tokyo and Paris retained their status as the top three priciest places to lease office space, based on a Cushman & Wakefield global leasing report. New York City was ranked fourth due to the market’s sinking rental rates.

"The threat of war and an increase in geopolitical tensions, as well as the large-scale financial scandals that took place last year, have marred the performance of the world’s economies, and this has had an effect on demand for office space," says David Hutchings, head of European research at Cushman & Wakefield.

According to the report, one square foot of prime office space in London’s West End district now costs on average $137.31 to rent for one year, vs. $102.56 in Tokyo and $89.28 in Paris. In fourth place, midtown New York City cost $71.53, while bottom-fishing tenants might want to lease space in Hong Kong, where $52.49 will buy one square foot for a year. Hong Kong, incidentally, has dropped from No. 5 to No. 12.

Other cities also have experienced sharp declines. Athens, Greece, experienced a 23% decline in rents over 2002, while. Buenos Aires, Argentina — still struggling with a financial crisis — saw rents drop a staggering 57%. The closest any U.S city came to that drop was Silicon Valley, where rents came down 26% last year.

"When the anticipated global recovery does happen, many markets will be in a much stronger position than during the last economic downturn given that the amount of new supply of office space and the new additions of sublease space is expected to slow considerably in 2003," says Bruce Mosler, president of U.S operations at Cushman & Wakefield.