Rental costs for premium office space in Taipei City have climbed to their highest level since the SARS epidemic in 2003 on the back of the nation's sustained economic recovery, a real-estate company said yesterday.
Net effective rental for the capital's Grade A office space in the first quarter rose by nearly 2 percent from the previous quarter, gradually recovering from the low point seen in the first quarter of 2003, according to a report released yesterday by Jones Lang LaSalle Taiwan.
Non-core business areas and the Dunhua North Road area also saw respectable gains for the quarter of 3 percent and 1 percent, respectively.
The only area to show a decline was the Xinyi district, where the Taipei 101 tower launched a very aggressive marketing campaign to fill its space.
The skyscraper was included in the firm's rental basket for the first time.
To reduce its vacancy rate, the Taipei 101 tower, which represents nearly one-third of the Grade A office space in the Xinyi area, offered space at more competitive prices than what the rental would have been in a smaller building of similar quality, the agent's associate director of commercial property Sherry Wu (
But the Xinyi district still reported the highest monthly rental at NT$2,370 (US$72.7) per ping (3.3m2), compared with Dunhua North Road at NT$2,260 and Dunhua South Road at NT$2,200.
The vacancy rate for the city's Grade A market edged down by 0.2 percent to 15.2 percent last quarter as many occupiers adopted a wait-and-see approach in signing new leases amid uncertainty over cross-strait relations, the firm said.
The relatively stagnant leasing activities are often characteristic of the first quarter, as the timing of the Lunar New Year holiday often delays relocation plans.
* Rents for Grade A office space in the city rose by nearly 2 percent in the first quarter from the previous quarter.
* The only district to show a decline was the Xinyi area -- home to Taipei 101 -- although it reported the highest monthly rental rate.
* The vacancy rate for Grade A properties declined by 0.2 percent to 15.2 percent last quarter.
Source: Jones Lang LaSalle Taiwan
Looking ahead, Jones Lang LaSalle expects that vacancy rates will continue to fall over the coming quarter, especially in the Xinyi area, supported by a number of small to mid-sized contracts signed during the first quarter.
As a growing number of businesses preferred moving into new buildings and major commercial areas, the Xinyi district was likely to remain the priority choice, the report said.
Rental growth is likely to continue at a steady pace, and landlords of buildings that have low vacancy rates will have more bargaining power to increase their rates, which will lead to rises in overall rental payments, the report said.