The leasing market is likely to stall this year with a mild increase in rents as firms turn conservative about expansion, but a limited supply of office space in prime areas is likely to lend support, Jones Lang LaSalle Taiwan (JLL, 仲量聯行) said in a report.
About 32,000 ping (105,600m2) of upscale office space could be on the market this year, thanks mainly to delayed completion of state-run Taiwan Cooperative Financial Holding Co’s (合庫金控) headquarters in Taipei’s Songshan District (松山), the report said.
The new complex is unlikely to increase the vacancy rate, because most of the space is intended for self-occupancy, JLL associate director Brian Liu (劉建宇) said.
The market is likely to stagnate going forward, because only one-third of firms are looking at expansion, limiting demand for office space, Liu said.
The vacancy rate stood at 10.6 percent at the end of last quarter, rising 2.6 percentage points from a year earlier and up by 0.1 percentage points compared with three months earlier, the report said.
However, the international property consultancy firm expects rental costs to climb 1 to 2 percent this year on the back of active demand for retail space and tourism-related business activities, Liu said.
Tourist numbers to Taiwan increased 5 percent to 94 million for the first 11 months of last year, with Chinese tourists contributing 3.86 million, the firm said, adding that the figures increased toward the end of the year.
Last year, occupancy rates totaled 25,600 ping, with 60 percent in Taipei’s Xinyi District (信義), the report said.
Financial, technology, retail and hospitality firms supplied roughly equal demand and pushed up the average monthly rent by 2.8 percent to NT$2,637 (US$78.42) per ping for Grade-A office space in Taipei, the report said.
Average monthly rental climbed to NT$3,092 per ping in Xinyi District and hovered at about NT$2,326 per ping on Danhua N Road.
“It is difficult to find office space in Taipei 101 or other landmark office buildings, despite an economic slowdown and a sluggish housing market,” Liu said.
Further rent hikes are unlikely given a lackluster economy and weak sentiment, the analyst said.
Grade-B office space fared weaker with vacancy rates rising to 4.8 percent in the second half of last year and average monthly rent shedding 0.2 percent to NT$1,766 per ping, the report said.
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