Vacancy rates for grade-A offices edged down last quarter from the previous quarter, while rent rates picked up slightly on the back of demand from financial and technology firms, international property broker Jones Lang LaSalle (JLL) Inc said yesterday.
The leasing market might stall for the remainder of the year as companies are likely to be conservative about expansion amid growing uncertainty due to an economic slowdown in the aftermath of the UK vote to leave the EU, the broker said.
Take-up rates for grade-A offices amounted to 5,394 ping (17,800m2) in the April-to-June period — much faster than 282 ping three months earlier — as technology and financial companies set a foothold in Taipei’s Xinyi District (信義).
Microsoft Corp took up 3,400 ping of office space in April and Sony Corp leased 460 ping in May, while Oracle Corp and Leopard Mobile Inc (台灣雪豹科技) rented 990 ping and 400 ping respectively last month, JLL data showed.
Those firms are reportedly seeking to tap the Internet of Things, gaming and other software businesses with help from Taiwanese professionals.
That helped bring vacancy rates to 9.8 percent last quarter, down 0.8 of a percentage point from the previous quarter, while raising rent rates by 0.3 percent to NT$2,649 per ping, JLL associate market director Brian Liu (劉建宇) said.
Despite the positive cyclical trend, the market has shown signs of slowdown, given the take-up rate that is similar to the level seen in 2010, when the market was recovering from the global financial crisis, Liu said.
The downward revisions by research institutes for global and domestic GDP are likely to drive firms to trim costs, which is unfavorable for leasing activity, he said.
However, JLL stands by its forecast that vacancy rates will trend further down in the second half of the year and rent rates might climb by between 2 and 3 percent this year, thanks to limited supply.
About 30,000 ping of new office space — mostly in non-central business districts — might enter the market later this year, but 80 percent of them are intended for self-occupancy, leaving only about 4,000 ping available for rent, Liu said.
The new supply refers to state-run Taiwan Cooperative Financial Holding Co’s (合庫金控) new headquarters building on Bade Road in Taipei, whose inauguration remains in limbo after repeated delays.
As for the investment market, JLL Taiwan managing director Tony Chao (趙正義) said more hotels might come into service or change hands in Taipei and Pingtung County later this year.
Investors remain upbeat about the local hospitality market, despite the lukewarm ties between Taiwan and China, because travel in Taiwan is relatively affordable and convenient for tourists from Singapore, Japan, South Korea and European countries, Chao said.
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