Office rents in Taipei could increase modestly next year, but soar by double-digit percentage points in the city’s prime Xinyi District (信義), thanks to healthy demand and a lack of new space, Colliers International Taiwan (高力國際) said yesterday.
Office rents in Xinyi’s landmark buildings have spiked 25 percent to NT$4,000 per ping, from NT$3,000 per ping five years ago, Colliers International Taiwan managing director Andrew Liu (劉學龍) told a media briefing.
“The leasing market will remain a landlord’s market in the coming three years, during which time tenants will have to absorb rent hikes to retain existing office space in central locations,” Liu said.
Like it or not, tenants would have to accommodate new leasing terms at the behest of landlords when they renew contracts or prepare to relocate, he said.
Vacancy rates for offices of different grades in Taipei dropped to 3.07 percent this quarter from 4.18 percent a quarter earlier, after space waiting for urban renewal was excluded, said Amanda Yang (楊慧明), senior executive director of the consultancy’s office services.
The findings suggest a take-up of 1.55 million ping (5.12 million square meters), from a total supply of 1.62 million ping, leaving only 49,400 ping available for rent, she said.
Grade-A office space is especially in demand at signature towers such as Taipei 101, Taipei Nan Shan Plaza (台北南山廣場) and Cathay Landmark (國泰置地廣場), Yang said.
As a result, rents for grade A offices are more than double that of grade-B offices, she said.
About 50,000 ping of new office space is expected to enter the market between next year and 2022, but might not increase supply much, as 60 percent of it is intended for self-occupancy, Yang said.
Business conglomerates have sought to boost the efficiency of their operations by gathering key units in the same buildings, Colliers International Taiwan said.
Demand for space is also strong among technology firms, e-commerce operators and software developers, it said.
The lack of office space would continue until the market arrives at a state of equilibrium, which is not far away given that developers and builders are pouring money into constructing office buildings, Liu said.
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