The vacancy rate for grade-A offices in Taipei last quarter climbed to 2.7 percent, as companies reduced space utilization and moved to less popular areas to save on operating costs amid economic weakness, property consultancy Jones Lang LaSalle Taiwan (JLL Taiwan, 仲量聯行) said yesterday.
However, monthly rents still rose 2 percent from a year earlier to NT$2,981 (US$97.89) per ping (3.3m2) with rents in the prime Xinyi District (信義) remaining above NT$5,000 per ping, due to healthy demand and limited supply, JLL Taiwan’s office leasing advisory director Christina Yu (游淑芬) said.
“The data show that the leasing market took a hit from an economic slowdown, which has prompted corporate tenants to trim office space or relocate to less expensive locations to control costs,” Yu told a media briefing.
Photo: Hsu Yi-ping, Taipei Times
Cost controls would further accelerate relocation to suburban areas, with Nangang District (南港) likely to be the biggest beneficiary, as 290,000 ping of new office space is to enter the market there between this year and 2027, bigger than the existing supply in central locations, the analyst said.
By measure of rent growth, Taipei outperformed other markets in the region due to its relative rent affordability, JLL Taiwan said.
However, the gap is narrowing, as office rents in Hong Kong are 2.5 times those in Taipei, when they used to be 3 times higher, Yu said.
JLL Taiwan has seen rent premiums of up to 15 percent for office buildings with energy conservation certificates, as corporations at home and abroad assign more importance to environmental friendliness and sustainable governance.
New JLL Taiwan managing director Kevin Hou (侯文信) said the consultancy would tap into that demand by helping clients obtain green certificates.
More than 50 percent of Grade-A office buildings in Taipei are older than 20 years and only 6 percent meet sustainable governance standards, Hou said, adding that 40 percent of carbon emissions come from property development and operations.
Old buildings use more electricity, Hou said.
Corrections in the office space market are due to a lack of business confidence and over-hiring over the past few years, he said, adding that the adjustment cycle would last for a while.
JLL Taiwan executive chairman Tony Chao (趙正義) said he is less pessimistic, and believes that urban renewal and railroad construction would continue to support Taiwan’s commercial and investment markets.
At the same time, companies that are returning home would display real demand for industrial properties, Chao said.
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