Taipei’s Grade A office space market is expected to be resilient in the second half of this year, despite a wave of new supply, with demand from technology companies and corporations seeking higher-quality workplaces expected to cushion the impact on vacancy rates, property consultant Jones Lang LaSalle Inc (JLL) said on Tuesday.
The market showed robust momentum in the first half of the year as companies expanded operations, upgraded office facilities and moved into newly completed buildings, JLL said.
Grade A office leasing transactions totaled 27,833 ping (918,489m2) in the first six months, up 37 percent from a year earlier, JLL said.
Photo: Hsu Yi-ping, Taipei Times
Transactions in Taipei’s business areas reached 25,737 ping, the highest level in nearly eight years, putting the full-year total on track to challenge the record, it said.
Second-quarter leasing activity alone totaled 13,797 ping, with 91 percent concentrated in core business districts, JLL said.
Taipei’s western areas and the Songjiang-Nanjing area recorded the strongest performance, together accounting for about half of total leasing volume, driven by continued absorption of newly completed projects, it said.
Technology companies were the biggest source of demand, fueled by expansion among artificial intelligence and semiconductor-related firms, JLL said.
The sector accounted for 55 percent of second-quarter leasing transactions, up from 38 percent in the previous quarter, it said.
Tenancy demand pushed vacancy rates lower for a fourth consecutive quarter, with the average vacancy rate falling to 5.1 percent, down 1.3 percentage points from three months earlier and the lowest in two years, it said.
Average rents in core business districts climbed 0.37 percent from the previous quarter to NT$3,283 (NT$101.99) per ping per month, it said.
However, rental growth slowed as the market entered a consolidation phase following recent gains, JLL said.
Looking ahead, about 47,000 ping of new office space, including owner-occupied projects, is expected to be completed in Taipei’s core business districts, which could place upward pressure on vacancy rates, it said.
Still, JLL said it expects demand for upgraded office environments, particularly from technology firms and companies pursuing workplace transformation, to support leasing activity and help maintain rental stability in the second half.
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