Vacancy rates for office space edged up 0.7 percent last quarter from three months earlier, but rental rates gained 1.8 percent, as corporate tenants remained cautious about rental expenditure amid the mild economic recovery, international property consultancy Jones Lang LaSalle said yesterday.
Vacancy rates for Grade-A office space rose to 11 percent in the January-to-March period, up 0.7 percent from the preceding quarter due to an increase of 22,000 ping (72,600m2) in new supply, Jones Lang LaSalle director Joe Lin (林大喬) said.
Rental rates averaged NT$2,433 per ping, up 1.8 percent from three months earlier, because landlords set higher asking prices and kept most of the new supply for personal use, Lin said.
Jones Lang LaSalle expects rentals for Grade-A office to pick up between 2 percent and 5 percent this year and recover to pre-financial crisis levels in 2015, given limited new supply in central business districts in the next few years, Lin said after a quarterly survey of 56 office buildings in the capital.
The room for rate hikes is also limited due to low rental yields, Lin said, because Taipei lags international cities in terms of rental yields.
“Despite encouraging economic data at home and abroad, corporate tenants put on a cautious attitude about rental expenditures on concerns over the modest pace of recovery,” the analyst told a media briefing.
Leasing activities accelerated in Dunhua South area last quarter with vacancy rates falling to 6.7 percent, compared with 13.8 percent in Xinyi District (信義) and 12.5 percent at Dunhua North area, as multinational corporations moved to Dunhua South area to cut costs, Lin said.
“A growing number of clients to indicates plans to relocate to suburban districts such as Neihu (內湖) and Nangang (南港) to strengthen financial efficiency,” he said.
As for the investment market, commercial property transactions totaled NT$25.4 billion (US$844.98 million) last quarter, more than four times the level of NT$4.67 billion a year earlier, despite the exit of domestic life insurance companies, Jones Lang LaSalle country managing director Tony Chao (趙正義) said.
Property disposal needs on the part of local technology firms accounted for the sharp increase, Chao said, adding more firms would take similar moves to revitalize idle assets.
Chao called on the Financial Supervisory Commission to lift the purchase ban on life insurers, saying property investments promise stable recurring incomes and are safer compared with other investment options for cash-loaded insurers.