Thu, Jul 05, 2012 - Page 13 News List

Demand for posh offices rose last quarter: report

By Crystal Hsu  /  Staff reporter

Vacancy rates for Grade A offices in Taipei edged down last quarter, while rental rates inched up on the back of demand for high-quality office space in the city’s prime Xinyi District (信義), a report by Jones Lang LaSalle said yesterday.

The average vacancy rate dropped to 10.2 percent during the April-June period, down 2.3 percentage points from three months earlier, as total take-up rose sharply to 12,445 ping (41,068m2), compared with a decline of 378 ping in the preceding quarter, Joe Lin (林大喬), the firm’s market director, told a media briefing.

The pickup in demand for upscale offices, notably from firms in the healthcare industry, buoyed rental rates, which stood at NT$2,387 per ping on average last quarter, up 0.2 percent from three months earlier, Lin said.

New leases accounted for about 3,100 ping, with the healthcare sector accounting for 30 percent of the take-up, the quarterly report showed.

Rental rates, a critical bellwether of real-estate market performance, are likely to hold firm for the rest of the year, as landlords become less flexible in price negotiations after the vacancy reading fell to a three-year low, Jones Lang LaSalle managing director Tony Chao (趙正義) said.

Rental rates could also get a boost from a dearth of new supply in the coming months, Chao added.

However, he expects the room for rate hikes to be limited as companies continue to avoid unnecessary spending amid the global economic uncertainty.

Local units of foreign corporations have been told to cut expenses, with some financial institutions intent on terminating lease contracts, Chao said.

Xinyi District reported the highest monthly rental rate, NT$2,695 per ping, in the second quarter, while the Dunhua South Road area had the lowest vacancy rate at 8.6 percent, the report said.

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