Wed, Oct 19, 2016 - Page 12 News List

Prime office vacancies rise: report

By Crystal Hsu  /  Staff reporter

Vacancy rates for grade-A offices edged up, while rental rates declined sequentially last quarter, as firms turned cautious about operating costs and landlords adjusted terms to attract tenants, international property broker Jones Lang LaSalle (JLL) Inc said yesterday.

The leasing market might consolidate this quarter due to continued demand from mobile game and telecommunications service providers, while low-cost carrier V Air (威航) is due to halt operations, the consultancy said.

Vacancy rates rose 0.2 percentage point to 10 percent for upscale offices during the July-to-September period, while rents slid 0.1 percent to NT$2,649 per ping (3.3m2), according to JLL, the nation’s largest broker by market share.

“Conservative spending on the part of firms drove the slowdown even though the leasing market was resilient in comparison with real-estate investment,” JLL associate market director Brian Liu (劉建宇) said by telephone.

Take-up rates totaled 4,315 ping last quarter, down 20 percent from the second quarter’s 5,394 ping, the JLL report said.

Relocation and self-occupancy needs underpinned the market, Liu said, referring to Cathay Financial Holding Co (國泰金控), whose affiliates moved into the Cathay Landmark, a 46-floor mixed-use building in Taipei’s Xinyi District (信義).

If compared with a year earlier, rental rates gained 2.5 percent, while occupancy rates shrank 0.5 percent, the report said.

Limited supply and continued demand for new office space in central business districts supported rental rates, Liu said.

Several companies want to move into new office buildings when their current leases expire and have had difficulty finding ideal space.

In Xinyi District, vacancy rates dipped 0.2 percent last quarter from three months earlier, while rents held steady at NT$3,118 per ping, the report said, adding that landlords have sought to attract tenants by offering grace periods and other incentives.

The situation extended to other business districts in the city.

Vacancy rates declined 0.4 percent in the Dunbei (敦北) area and dropped 2.6 percent in the Dunnan (敦南) area, the report said.

Vacancy rates might remain this high this quarter as V Air is due to halt operations to curb losses, Liu said.

A drastic drop in Chinese tourists has hit the bottom lines of the nation’s budget airlines, Liu added.

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