Active leasing transactions in Taipei’s commercial property market have markedly pushed up rental prices this year and made office space “a landlords’ market,” due to a lack of new supply, an international real-estate consultancy said.
“The annual rental increase in the past 15 years usually stands at 1.5 percent in Taipei. We already saw a 1.6 percent increase in the first three quarters, higher than [in] past years,” Colliers International said in a report.
In the third quarter, average monthly office rental in Taipei increased 3.7 percent year-on-year to NT$1,902 per ping (US$18.85 per square meter), with the average rental rising to NT$2,395 in Xinyi District (信義) and to NT$3,200 for premium-grade buildings, the report found.
At NT$3,350 per ping, the average rental for premium-grade buildings in Xinyi was 76 percent higher than the Taipei average, it said.
“We expect the market to remain a landlords’ market due to the lack of new supply, and forecast further significant rental increase in Xinyi District and premium-grade buildings in the following 12 months,” Colliers said.
The report also found the occupied space of office buildings increased to 1.55 million ping (5.12 million m2) in Taipei’s office market last quarter, with a net take-up — or absorption of available space — of 8,670 ping, the report said.
Driven by corporate expansion, lease renewals and flexible workspace business, the strong office demand has boosted the net take-up above 5,000 ping per quarter over the past 11 quarters, it said.
Meanwhile, the number of fully occupied office buildings in Taipei continued to increase last quarter, with leasing transactions in Xinyi and premium-grade buildings most active in the quarter, the report said.
Of the 253 buildings surveyed, the number of fully occupied office buildings increased from 161 in the first quarter to 176 in the third quarter, implying that nearly 70 percent were completely occupied, it said.
With no new supply this year, the vacancy rate has dropped for six consecutive quarters, hitting 4.2 percent last quarter.
Colliers said that it expects the vacancy rate to drop further to 3.3 percent by the end of this year, which would be the lowest since records began in 2001.
“We estimate this trend will continue in 2020,” it said.
The report said that a large supply of office space in Nangang District (南港) — the cornerstone of the city government’s Eastern District Gateway Project (東區門戶計劃) — should begin to ease the supply pressure on the city’s central business district (CBD) next year.
“As Taipei expands eastward, we expect Nangang to be a new hot spot, and over 250,000 ping of new supply is scheduled to be released between 2020 to 2026. This will likely be able to ease the lack of new supply in Taipei’s CBD,” Colliers said.
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