• Taiwan’s Overall Office Vacancy Rate in Q3 Marks the Lowest of the Past 10 Years
Investors & Developers

Taiwan’s Overall Office Vacancy Rate in Q3 Marks the Lowest of the Past 10 Years

Taiwan's Overall Office Vacancy Rate in Q3 Marks the Lowest of the Past 10 Years

Taiwan market’s overall vacancy rate declined 0.6 percentage points quarter-on-quarter (q-o-q) to 5.4% in the third quarter of 2019, marking the lowest vacancy rate of the past 10 years. Compared with prior vacancy rates for each submarket, Dunbei / Minsheng led the way with a drop of 1.4 percentage points q-o-q, followed by West with a decrease of 0.7 percentage points, q-o-q. In the Dunbei / Minsheng submarket, relocation of tenants from buildings in urban renewal programs was a major driver of leasing activity in the quarter, with the new location spot remaining in the same submarket with a leasing area of 100-200 pings. Accumulative absorption amounted to 35,800 pings for the past three quarters. The professional services sector was the most notable source of occupier demand, taking up 23% of total leasing area. The co-working space ranked second, accounting for 22% of leasing area, including WeWork and JustCo, with international co-working space operators pursuing positive expansion strategies in Taiwan.

Landlords dominate rental levels

Average rent for Grade A office space remained stable in Q3, as per the past half year, and continuing to reflect a shortage of supply. The average rent was NT$2,580 per ping per month in Q3. Compared to the previous two quarters, leasing activity was infrequent, again due to a lack of supply. The majority of tenants chose to renew their contract and accept a higher rent when the contract expires.

Future new supply is lacking

In the leasing market of the past three quarters the key driver of absorption of new supply has been demand for large area headquarters premises. However, in Q4 the office market is expected to be lacking in leasable area, and hence we expect to see a drop in both leasing activity and absorption. As well, the average leasing area will drop into a medium or small-sized classification.

 

Explore the current office landscape and other markets in Taiwan in our Q3 2019 Taiwan MarketBeat reports. Download the full reports here.

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