Vacancy rates for grade A offices in Taipei held relatively steady at 2.1 percent last quarter, while monthly rent edged up 0.7 percent to an average of NT$2,828 (US$99.48) per ping (3.3m2) as demand remained strong, while space is limited, Jones Lang LaSalle Inc (JLL) said yesterday.
The vacancy rates suggested a small net takeout of 25 ping as a lack of new supply is hampering activity, JLL Taiwan managing director Tony Chao (趙正義) told a news briefing in Taipei.
JLL Taiwan, which commanded more than 60 percent of the market in Taipei, said that demand, especially from tech firms, is so strong that even upcoming new office buildings have secured tenants, Chao said, referring to a new office complex in Zhongshan District (中山) developed by Fubon Life Insurance Co (富邦人壽).
Photo: Hsu Yi-ping, Taipei Times
Standard Chartered Bank Taiwan (渣打台灣銀行) is to relocate its headquarters to the new building and so would a fitness brand, Chao said.
Another new office building developed by Transglobe Life Insurance Co (全球人壽) is to be mainly occupied by Japan's Panasonic Corp and e-commerce operator Shopee Taiwan Co (樂購蝦皮), which has seen its business grow rapidly amid the COVID-19 pandemic, he said.
Preleasing is common in locations where demand is greater than supply, Chao said, citing as an example Taipei Nan Shan Plaza (台北南山廣場), which found many of its tenants before the mixed-use complex in Taipei’s prime Xinyi District (信義) came into service.
Huang Hsiang Construction Corp (皇翔建設) has called off plans to build a hotel near Taipei Railway Station in favor of constructing an upscale office building that might enter the preleasing market next year, Chao said.
About 40 percent of Grade A office spaces in Taipei are 20 years or older, fueling relocation demand for new office spaces that feature environmentally friendly designs and offer the latest technological conveniences, Chao said.
Real demand has underpinned the local leasing market, supported by Taiwan’s vibrant economy, he said, adding that he had helped Alphabet Inc’s Google find office space in Taiwan.
If the trend is sustained, average monthly office rent might climb above the NT$3,000 mark per ping to a record high next year, Chao said.
Office rent reached that level in the early 2000s, but slid after the technology bubble burst, the SARS pandemic and a global financial crisis, Chao said.
The office crunch has a fair chance of a turnaround from 2025, when a large supply of properties are expected to enter the market, observers said.
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