Taiwan's prime office-leasing market is on track to a revival, as corporate executives are tending to pay more for better office space amid an improving economy, an estate agent said yesterday.
This is a phenomenon not seen for the past three years, Jones Lang LaSalle said in a report.
"The best property has started to attract a premium over and above what `average' property earns. This is a characteristic of a rising market," said Steven Craig, head of the research division of Jones Lang LaSalle.
Monthly rents for upscale offices in Taipei's Xinyi district, location of the capital's most expensive office building, Taipei 101, in the second quarter of this year averaged NT$2,400 per ping, or about 20 percent higher than the NT$1,985 per ping average in non-core business districts, the property agent said.
A year earlier, rents in the district were a mere 10 percent higher than those in other areas, Jones Lang LaSalle said.
Now that the Grade A leasing market has recovered, the gap between the prices of the best properties and the rest will widen significantly, Craig said.
"We found recently that companies are willing to pay as much as NT$2,600, far higher than the average, for offices with better facilities such as fiber-optic cabling. These prices were unimaginable two or three years ago," said Sherry Wu (吳瑤華), an associate director of Jones Lang LaSalle.
In the next few months, the vacancy rate for Taipei's upscale offices would start to fall from a peak of 18.7 percent last quarter, after new tenants move into Taipei 101 and Uni-President HQ Building, Jones Lan LaSalle said.
The two new buildings were added to the list of upscale offices, the agent said.
Despite the current high vacancy rate, rents for upscale offices in Taipei rose 1.5 percent to NT$2,210 on average during the quarter ended this month from the previous quarter, due to consistent demand largely for prime office buildings, Jones Lang LaSalle said.
CB Richard Ellis Ltd, another property agent, shared the optimism, citing Taiwan's sustainable economic growth this year.
Rising demand for upscale offices would push up rents further in the upcoming quarter and thereby drive down the vacancy rate, the company said.
"Without new supply in the near term, big companies looking for new offices mostly put Taipei 101 on their shortlist. That has been a complete reverse of their previous conservative attitude," CB Richard Ellis said in a report released yesterday.