Vacancy rates for grade A offices in Taipei fell to 2.9 percent last quarter, little changed from 3 percent three months earlier, as demand for upscale office space remains strong, but a lack of new supply limited activity, international property consultancy Jones Lang LaSalle Inc (JLL) said yesterday.
Tight supply in the third quarter saw a take-up rate of just 358 ping (1,183m2), compared with 15,000 ping in the second quarter and a year earlier, JLL senior market director Brian Liu (劉建宇) said at a news conference.
An almost full occupancy rate saw the average monthly rent edge up 0.3 percent to NT$2,776 (US$90) per ping, with the figure at NT$3,361 per ping in Xinyi District (信義) and even higher for new office space, Liu said.
“Relocation and the headquarters needs of the financial, technology and Internet sectors underpinned the leasing market, while the rapid growth of coworking also helped,” JLL Taiwan managing director Tony Chao (趙正義) said.
Coworking is where workers from different companies share an office space, facilitating cost-saving and convenience through the use of common equipment, utilities and custodial services.
Coworking is accounting for 20 percent of take-up rates in Hong Kong, Chao said, adding that JLL has a need for more coworking space, but is unable to find suitable sites.
Ageing office buildings in Taipei are adding to the difficulty as by 2024 about 30 percent would be older than 20 years, he said.
In other international cities, JLL removes the grade-A label from office buildings that are older than 20 years.
Old office buildings do not have the infrastructure or flexibility to meet modern business needs, Chao said.
The lack of new supply would lend unpredictability to the leasing market next year, JLL said.
“Landlords might be tempted to raise rents and challenge the tolerance of tenants, with the economy stalling due to the US-China trade dispute,” Chao said.
Companies might have no choice but to relocate to Nangang (南港) and Neihu (內湖) districts, where 170,000 ping of new office space is to enter the leasing market over the next few years.
Commercial property transactions rose to a 10-year high of NT$64.1 billion last quarter, if the Mandarin Oriental Taipei (文華東方酒店) deal proves to be true, JLL said.
Reports last month said that Kai Tai Fung International Co (開泰豐國際), owner of the luxury facility, had signed an agreement with a Canadian billionaire to sell the property for NT$38.5 billion.
“The local property market might experience a stronger recovery next year as investors at home and abroad are interested in raising their real-estate stakes,” Chao said, adding that the ongoing unrest in Hong Kong makes Taiwan more attractive.
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