Vacancy rates for Grade-A offices in Taipei dropped to 8.7 percent last quarter, from 10.5 percent three months earlier, driven mainly by owner-occupancy demand, even though companies remained generally cautious about rental spending, Jones Lang LaSalle said in a recent report.
The leasing market was stable between January and last month with total take-up reaching 10,548 ping (34,869m2) attributable to owner occupancy and demand for small and mid-sized office space, the international property broker’s Taipei-based director Joe Lin (林大喬) said.
Owner occupancy accounted for 63 percent of the take-up last quarter as one landlord leased office space to its own subsidiary.
Monthly rental rates stood at an average of NT$2,519 per ping last quarter, rising 1.9 percent from three months earlier and up 3.5 percent from the previous year, the report said, adding that the quarterly gain marked the fastest pace of increase since the global financial crisis in 2009.
“Landlords with low vacancy rates decided it is time to charge higher rentals,” Lin said.
The absence of new supply in the market last quarter allowed them to do so without negative impact, he said.
The Xinyi District (信義) submarket continued to be the prime location for multinational and Chinese corporations with vacancy dropping by 3.5 percentage points to 11.4 percent last quarter, though new leases were chiefly limited to small office units, the report showed.
The district recorded a take-up of 8,842 ping, the highest among all monitored areas, boosting monthly rental rates by 2.8 percent to NT$2,891 per ping, the report said.
There are 18 Chinese firms, mainly in the financial sector, leasing about 4,000 ping of office space in the district, the broker said.
Dunhua North (敦北) continued to draw corporate tenants with relatively lower rents last quarter as evidenced by an overall take-up of 1,410 ping and a hike of 2 percent in rental value, the report showed.
Leasing activity remained flat in Dunhua South (敦南) and the non-core submarket last quarter given their modest take-up of 190 ping and 105 ping respectively, the report said.
Looking ahead, about 76,000 ping of new office space will join the leasing market this year, which may push the vacancy rate higher and weigh on rental rates starting in the final quarter, Lin said.
State-run Hua Nan Financial Holding Co (華南金) and Taiwan Cooperative Financial Holding Co (合庫金) are due to complete construction of their new headquarters buildings in the Taipei districts of Xinyi and Zhongshan (中山) respectively the second half.