The premium office space market in Taipei is expected to see solid growth in the next two years on the back of strong upgrade demand from companies, with both overseas ones seeking better offices and local firms looking to build a better image, a real-estate company said yesterday.
"Upgrading has become a dominant feature of occupier demand in Taipei," Jones Lang LaSalle said in a statement released yesterday.
Companies are seeking better office specifications, including back-up power provision, broadband cable networks and access to high-speed data transmission systems as well as a safer work environment. Buildings that can absorb frequent earthquakes are also in demand, the agent said.
The narrow rental price difference between Grade A and Grade B office spaces also contributed significantly to the demand for upgrades, the property brokerage said, citing an average rent of NT$2,200 per ping per month for A-list offices -- about 30 percent higher than Grade B rental rates.
However, the relatively low rental differential is unlikely to persist as rents start to rise and thus could normalize to the levels seen in other locations, such as Singapore or Hong Kong, where Grade A offices enjoyed a rental premium of approximately 45 percent to 48 percent, according to Jones Lang LaSalle.
Additionally, the strong replacement demand for A-list office properties stemmed from the tight supply prior to 2001, the agent's associate director of commercial property Sherry Wu (
Many multinational corporations that were forced to take lower-level office spaces years ago are expected to become the biggest source of demand for the premium office space in the next two years as new space comes onto the market, Wu said.
Local firms with an awareness of presenting a strong, positive image to customers and clients are expected to support this wave of upgrade demand.
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