High-end office demand remains, JLL Taiwan says

• By Crystal Hsu / Staff reporter

• • Add TT as Preferred Source

  • 

  • 

  • 

Taipei’s high-end office market continued to attract solid demand in the third quarter as companies upgraded their workplaces, helping absorb new supply that pushed vacancies moderately higher, Jones Lang LaSalle Taiwan Ltd (JLL Taiwan, 仲量聯行) said yesterday.

Grade-A office transactions rose 8 percent from a year earlier to 12,279 ping (40,592m2) in the third quarter, with several large deals in the city’s Nangang District (南港) providing a major boost, it said.

Deals that had been under negotiation earlier this year were completed during the quarter, showing that companies remain willing to expand or move into newer, higher-quality offices, JLL Taiwan head of leasing advisory Christina Yu (游淑芬) said.

Jones Lang LaSalle Taiwan Ltd managing director Kevin Hou speaks at a news conference in Taipei yesterday.

Photo: Hsu Yi-ping, Taipei Times

Demand helped support rents even as the vacancy rate in Taipei’s core business districts rose to 5.8 percent as new buildings entered the market, JLL Taiwan said.

Average rents reached NT$3,293 per ping a month, up 0.32 percent from the previous quarter and 2.3 percent from a year earlier, extending a moderate upward trend.

Xinyi District (信義) was the strongest-performing area, accounting for 55 percent of transactions in Taipei’s core business districts. Continued leasing at the Taipei Dome International Center was a major driver, with the largest deal covering 1,400 ping.

Companies are increasingly favoring newer offices, with buildings less than two years old accounting for 71 percent of leasing activity in the city’s core business districts, JLL said.

“Companies are increasingly looking beyond location and size when choosing offices, with smart-office features, employee experiences and ESG [environmental, social and governance] standards becoming more important,” Yu said.

The trend is also broadening the sources of demand beyond technology companies. Financial and insurance firms accounted for 26 percent of leasing activity last quarter, up sharply from 6 percent in the previous quarter, suggesting traditional businesses are also moving to modernize their workplaces, Yu said.

The market is expected to remain relatively stable in the near term. About 35,000 ping of new office space is due to be completed in this quarter, but much of it is expected to be occupied by the owners themselves, limiting the amount of space available for lease and cushioning the impact on vacancy rates, JLL said.

The bigger shift could come in the longer term as Taipei’s aging office stock puts increasing pressure on companies to relocate, Yu said.

About half of the office buildings in the city’s core business districts are older than 20 years, while a new wave of developments is scheduled to enter the market after 2028.

That could set off a new cycle of corporate relocations and workplace upgrades, keeping demand for high-quality offices relatively resilient even as Taipei faces a larger pipeline of new supply, JLL said.