Office Occupancy In Asia Greatly Surpasses Europe, North America

ASIA PACIFIC – Colliers revealed that the region’s office occupancy rate averages around 80 percent, which significantly exceeds that of North America (50 percent) and Europe (65 percent), reported The Edge on Friday afternoon (16 June, SGT).

In the real estate consultancy’s industry report, it said the stark contrast boils down to different return-to-office approaches, ESG compliance, and underlying city functionality, as well as market reactions to changes in inflation and interest rates.

Consequently, the huge disparity in workspace occupancy has led to divergence in office property prices, office investment volumes, and global investment appetite.

“Even as the office markets globally continue to face short-term challenges, Asia Pacific remains attractive for office investments over the longer term,” explained Chris Pilgrim, Managing Director of Colliers’ Asia Pacific Capital Markets business.

“The strong underlying fundamentals include the diverse range of markets, positive sentiments towards offices from a demand perspective and strong population-led economies presenting more resilient economic growth,” he added.

On the other hand, North America’s office sector faces dismal occupier demand. Consequently, the continent’s average office vacancy level has increased to 16 percent, and the ability of office landlords to offer perks to support office rents continues to be stretched.

As for prime office space in Europe, rents of these assets are rising as demand for higher-quality workspaces is growing, particularly for ESG-compliant offices.

“We are seeing pressure to repurpose space that doesn’t meet contemporary demands as a growing proportion of buildings face obsolescence,” commented Luke Dawson, Head of Global and EMEA capital markets at Colliers.

“This is driving a shift in value-add plays across key markets, especially where high importance is placed on ESG, such as in the UK,” he noted.