Vanishing grade-A office space augurs steep rents 1

As the average unoccupied rate for grade-A office space in Taipei falls, rent is forecast this year to increase at the fastest pace in a decade, commercial real-estate services and investment firm CBRE Group Inc said.

The average unoccupied rate for grade-A office space in Taipei fell for a fifth consecutive quarter in the second quarter and average rent rose 3.4 percent from a year earlier to NT$2,765 per ping (about 3.3m2), CBRE said in a research report.

As more multinational firms are moving into grade-A offices in Taipei, more than 10,000 ping in grade-A office space was taken up over the past 18 months, tripling the long-term average, CBRE said.

Average rent for premium grade-A offices in Xinyi District (信義) reached NT$3,428 per ping in the April-to-June period, the highest ever.

Demand for grade-A offices in Taipei from the service sector and technology and real-estate industries has been strong over the past two quarters, with the three industries accounting for more than 20 percent of grade-A office leases in the city, the advisory company said.

If the trend continues, rent for grade-A offices in Taipei is expected to grow for the rest of the year and could increase 3.5 percent, the highest in a decade, CBRE said.

Supply of grade-A offices in Taipei has been limited, so the unoccupied rate could fall below 2 percent in two years, leaving tenants with less room to negotiate prices, it said.

Meanwhile, CBRE said that Taipei came 18th in the Asia-Pacific region in terms of average rent for premium grade-A office space in the first quarter of this year.

In the January-to-March period, the average yearly rent for premium grade-A office space in Taipei hit US$70.28 per square meter, little changed from a year earlier, CBRE said.

Taipei was far behind Hong Kong’s Central District, where the average yearly rent for premium grade-A office space was US$322 per square meter, followed by Hong Kong’s Kowloon District at US$208.67, Beijing’s Financial Street at US$187.77, Beijing’s Central Business District at US$177.05 and Tokyo’s Marunouchi-Otemachi area at US$167.82, it said.

Connaught Place in New Delhi came sixth at US$143.97 per square meter a year, followed by Shanghai’s Pudong District at US$128.51, Singapore at US$114.28, Shanghai’s Puxi District at US$109.36 and Seoul’s Central Business District at US$104.53, CBRE said.