Office rents this year might grow 3 percent annually after a 2.9 percent pickup last year, as demand from the technology and financial sectors remains strong, Jones Lang LaSalle Inc (JLL) said yesterday.
Average monthly rents rose to NT$2,728 (US$88.47) per ping (3.3m2) for grade-A office space in Taipei in the fourth quarter, a 2.9 percent increase from a year earlier, while vacancy rates dropped to 5.5 percent, the international property consultancy said.
Take-up rates totaled 20,086 ping during the October-to-December quarter, with new buildings almost fully occupied shortly after entering the market, as financial, technology and professional consultancy firms and e-commerce operators looked for better working environments, and relocated to central business districts, JLL associate market director Brian Liu (劉建宇) said.
JLL expects vacancy rates to taper to 4 percent this year, while room rates are to reach NT$2,800 per ping, with little new supply, Liu said.
“Several clients have expressed interest in upscale offices in Taipei, which might only see 4,000 ping added this year,” Liu said, referring to a new mixed-use complex by Huang Hsiang Construction Co (皇翔建設) in Zhongshan District (中山).
The estimate could be overly optimistic, as the developer might turn a higher portion of the complex into more profitable residential units, JLL Taiwan managing director Tony Chao (趙正義) said.
For the whole of last year, take-up rates swelled to a record high of 61,646 ping, pushing up rents in the city’s prime Xinyi District (信義) by 4.5 percent, JLL’s report showed.
The Taipei Dome project could add 10,000 ping of office space if the city government and Farglory Group (遠雄集團) can settle safety concerns, JLL said.
The leasing market seems unaffected by an economic slowdown caused by a trade dispute between the US and China, Chao said, adding that monthly office rents would surpass NT$3,000 per ping in three years.
JLL, which last year helped organize the bidding for the Taipei Twin Towers development project near Taipei Railway Station, is this year looking for developers to renovate the century-old Chienkuo Beer Brewery (建國啤酒廠) and Taiwan Power Co’s (台電) idle plots in Nangang District (南港), Chao said.
Growth potential for the property market is strong in light of ample liquidity and low borrowing costs if buyers and sellers can settle their pricing differences, he said.
Local insurers have up to NT$5.6 trillion in funding for property investments, but have had difficulty finding ideal targets, Chao added.
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