APPD Market Report Article
TaipeiMay 31, 2022
Companies still exhibit demand to relocate
- Net absorption reached 1,000 ping in the quarter and remained in a buoyant market. Furthermore, leasing demand remained strong across the market. Consequently, most of these buildings are fully occupied, which has resulted in tenants having hardly any room to move or extend.
- Considering the need to repurpose old offices, improve office space, and introduce new office requirements (healthy, sustainability, and flexibility), there is optimism regarding the rate of consumption of the new supply.
Only one building is expected to complete in 2022
- With insufficient supply, the vacancy rate reached below 2%, reaching a historical low. In the next five years, with limited available stock in the market, premium office rents will continue to rise.
- The vacancy rate in Xinyi District has reached a historic low of 1.5%, but it is still one of the first choices for companies located in Dunhua North and Dunhua South.
Rents expected to see a 2-4% increase in three years
- The strong demand for high-quality office space led Xinyi to lead the market for rental growth. In addition, the Grade A office supply pipeline is limited, premium office rents are driving overall growth and thus, overall rents will likely see a 2-4% increase in three years.
- Because the vacancy rate is already down to the extremely low level of 1.9%, landlords usually postpone the leasing agreement if the new asking rental rate is lower than expected.
Outlook: Insurers dominate the leasing market
- In spite of the COVID-19 epidemic in the city, the customer and employment markets continued to recover which supported an improvement in the investment market on the demand side.
- As a safe-haven asset, demand from Insurance companies, the technology industry, e-commercial companies, and the logistic sector is still rising.