Vacancy rates for grade A offices in Taipei dropped to 2.36 percent last quarter as robust demand and a lack of new supply helped the market avoid the effects of the COVID-19 pandemic, Jones Lang LaSalle Inc (JLL) said on Tuesday.
The office market is poised to benefit from a sustained recovery, with a 3 to 5 percent increase in rents for the rest of this year, the local branch of the US broker said.
The second quarter saw a take-up rate of 3,212 ping (10,618m2), keeping vacancy rates at their second-lowest level in history, JLL Taiwan senior market director Brian Liu (劉建宇) told a news conference in Taipei, calling the forecast conservative amid tight supply.
“Rents at landmark buildings in the city’s prime Xinyi District (信義) already soared by double-digit percentage points this year, and landlords will continue to have the upper hand,” said Liu, whose company controls more than 50 percent of the local leasing market.
Taipei’s resilient showing bucked regional trends, as vacancy rates rose 6.7 percent in Seoul, 1.7 percent in Singapore, 1.2 percent in Hong Kong and 1.1 percent in Beijing, JLL data showed.
The pandemic is accelerating supply chain realignment as evidenced by the Ministry of Economic Affairs receiving investment pledges of more than NT$1 trillion (US$33.78 billion) by the middle of May, JLL said.
Taiwan’s efficiency in containing the spread of COVID-19 would enable companies to proceed with investment plans on schedule, whereas in many other parts of the world, attempts at expansion have been pushed back by lockdowns, the company said.
Rents held steady from the previous quarter at NT$2,809 per ping, with rents in Xinyi standing at NT$3,411 per ping, still more affordable than upscale offices in other international cities, JLL said.
JLL Taiwan managing director Tony Chao (趙正義) said that the pandemic might permanently reshape people’s lives, including working arrangements.
Remote working and learning would stay and gain traction, as would the coworking model, which would reduce the need for physical office space, Chao added.
However, companies would maintain greater space between staffers and set aside more social areas in the post-pandemic era to help employees stay healthy and motivated, meaning that overall office space might remain at similar levels, Chao said.
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