Taipei’s Grade A office space market posted a lackluster performance this quarter with the vacancy rate rising to 17.52 percent, from 16.27 percent three months earlier, primarily because of new supply in the prime Xinyi District (信義), Jones Lang LaSalle said in a report yesterday.
“The Grade A office market showed less promise in the fourth quarter than the preceding quarter due to decentralization by tech companies,” said Sherry Wu (吳瑤華), director of investments and markets at the international real estate service provider, in the report.
The vacancy rate in Xinyi -grew 4.06 percent to a record high of 24.72 percent as the completion of the Shin Kong A12 development increased supply, Wu said.
However, the overall rental rate edged up 0.43 percent to an average of NT$2,396 (US$78.83) per ping (3.3m2) a month.
Next year, the vacancy rate is expected to fall amid increasing demand from Chinese financial institutions for Grade A offices, which may lead to an increase in rental rates on limited new supply, Jones Lang LaSalle said in the report.
Financial institutions account for 42.01 percent of overall new leases this year, with 77.83 percent of them international tenants, the report said.
“We expect increasing Chinese investment to boost office demand further,” Wu said.
Chinese firms invested about NT$3.1 billion in the first 10 months, more than double the amount for the same period last year, the agency said, adding Chinese firms prefer office locations in Xinyi, Songshan (松山) and Zhongshan districts (中山).
This quarter, the monthly rental rate in Xinyi stayed flat at NT$2,699 per ping, while the rental rate rose 4.04 percent to NT$2,306 in the Dunhua North area, the -report showed.
Xinyi District ranks 11th in terms of rental rates in a survey of 25 cities or areas in the Asia-Pacific region, while Hong Kong tops the poll, the report said.
The vacancy rate in Dunhua North dropped to 12.66 percent this quarter, from 13.93 percent in the third quarter, thanks to the newly built Taipei Financial Center, the report said.
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