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Grade-A office space filling up

The vacancy rate for grade-A office space in Taipei fell to 13.6 percent in the first quarter from last quarter's 17.7 percent, Jones Lang LaSalle Taiwan (仲量聯行) said in its quarterly report.

A total of 14,000 ping of grade-A office space in Taipei was absorbed in the first quarter, the international real-estate firm's managing director, Calvin Wang (王治平), said yesterday, adding that the Xinyi area saw the lowest vacancy rate, 7.1 percent, with what the company called a gross achievable rent of NT$2,150 per ping.

"Supported by a low vacancy rate, rents in the Xinyi area may start to rise in the following quarters before the opening of Taipei 101 in December," Wang said.

The opening of Taipei 101 is expected to put up to 60,000 ping of new office space onto the market.

Wang added that a lot of foreign companies relocated their offices to the Xinyi district from elsewhere in Taipei to take advantage of the rent decline of the past year.

The area around Dunhua South Road saw the highest vacancy rate, 20 percent, with a gross achievable rent of NT$2,130 per ping, while the vacancy rate for the area around Dunhua North Road fell to 8.2 percent with a gross achievable rent of NT$2,090 per ping, the company's report said.

Net effective rents -- what a landlord receives after accounting for the various costs incurred by the landlord for the leased property -- for grade-A office buildings, however, fell by 1.8 percent in the first quarter to an average of NT$2,085 per ping, according to Jones Lang LaSalle Taiwan.

The company said that the rent decline was most pronounced in the Xinyi District, where average rents fell 2.5 percent. Average rents fell 1.5 percent in the Dunhua North district and 1 percent in the Dunhua South area, which saw the largest rental decline last year, the company's report said. The report added, however, that most of this quarter's leasing activities were focused on other non-core areas.

Jones Lang LaSalle was optimistic about the nation's market for office space, pointing to the economic recovery and inquiries from institutional investors about opportunities in the market.
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