The recession has prompted firms to move out of upscale office buildings with the vacancy rate for grade-A office space in Taipei soaring to a seven-year high of 9.9 percent in the first quarter, Jones Lang LaSalle Taiwan (仲量聯行) said in its quarterly report.
The vacancy rate gained 2.8 percentage points to 9.9 percent in the first quarter, the worst showing since the technology bubble collapse in the fourth quarter of 2001, Sherry Wu (吳瑤華), director of the global real estate agency’s Taiwan branch, told a media briefing.
Wu said she expected the vacancy rate to hit a new high of 18 percent, with rents to drop 15 to 20 percent in light of the grim business prospects.
COST CUTTING
“More firms will cut costs and move out of grade-A offices,” Wu said. “Many of our customers are demanding lower rents and some favor relocating to more affordable districts.”
Wu said she estimated the total occupancy area would contract by 20,000 ping (66,000m2) this year, a forecast that may prove optimistic.
REDUCED NEED
“The rising jobless rate indicates fewer people are working, which in turn means less office space is needed,” she said.
An additional 22,000 pings of office space would join the commercial property market later this year, putting greater pressure on landlords to lower monthly rental rates, Wu said.
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