Sat, Apr 04, 2015 - Page 13 News List

Taipei office rents increase despite a larger vacancy rate

By Crystal Hsu  /  Staff reporter

Rental rates for top-grade office buildings in Taipei climbed in the first quarter, despite a larger vacancy rate attributable to an increase in supply, international property consultancy Jones Lang LaSalle Taiwan (仲量聯行) said in a report.

Monthly rents for Grade-A office space in the capital averaged NT$2,577 per ping (3.3m2) over the past quarter, up 2.3 percent from the previous year and 0.4 percent from the preceding quarter, as landlords in prime locations raised rates amid an improving economy, the report said.

The vacancy rate at Taipei 101, formerly the world’s tallest skyscraper, has dropped below 5 percent, leaving prospective tenants little room to bargain, the property broker said.

Net take-up totaled 5,896 ping last quarter, with 40 percent of demand for upscale office space concentrated in Xinyi District (信義), the report said.

Financial firms in particular have showed a penchant for office space in Xinyi District. State-run Hua Nan Financial Holding Co (華南金控) recently moved its headquarters to the district, where Cathay Financial Holding Co (國泰金控), Shin Kong Commercial Bank (新光銀行), DBS Bank Taiwan (星展銀行), E.Sun Commercial Bank (玉山銀行) and HSBC Bank Taiwan (匯豐台灣商銀) already have a presence.

Monthly rent for office space in Xinyi District gained 4.4 percent year-on-year to NT$3,017 per ping over the past quarter, the sixth consecutive quarter of rent increases, the report said.

Vacancy rates climbed 9.3 percent to 56,903 ping last quarter, 0.6 percentage points higher than the previous year, due to new supply, which might measure a total of 79,000 ping this year, the report said.

Hua Nan Financial aims to lease about 2,500 ping of floor space at its new headquarters, priced at NT$3,000 per ping a month, the company said.

Jones Lang LaSalle expects average rent for office buildings to rise by between 2 percent and 3 percent this year after having recovered to the levels seen before the global financial crisis in 2008.

While new supply might put some downward pressure on rates, booming tourism has lured international retailers and food and beverage operators to the market, the real-estate firm said.

Taiwan’s inbound tourists totaled 9.91 million last year, growing at the second-fastest pace worldwide, Jones Lang LaSalle said, adding that 373 foreign firms — 175 from China — invested in Taiwan, representing a 30 percent increase from the previous year. That is expected to inject a healthy dose of traction into the rental market, it said.

New office space in the Dazhi (大直), Nangang (南港) and Songshan (松山) districts secured tenants for between 80 percent and 97 percent of the total space upon hitting the market, affirming the strong demand, Jones Lang LaSalle said.

Owner occupancy is expected to account for 35 percent of new office space this year as companies intent on saving costs are looking to relocate to suburban areas, it said.

Convenience of transportation and infrastructure also top the list of leasing concerns, apart from rental rates, it added.

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