Office Space Demand In Asia Pacific To Normalise In 2022
ASIA PACIFIC – Real estate consultancy CBRE stated that while the return to office in western countries has been slow, Asia Pacific’s office market fared better, reported The Edge on Friday afternoon (5 August, SGT).
“If you compare Asia Pacific, we came out from this crisis earlier (than the US and Europe). I looked at the net absorption in 2021 and it increased by 40 percent. That is a very strong demand and we do expect the demand’s momentum to be normalised by this year,” said Ada Choi, Head of occupier research for Asia Pacific at CBRE.
She also noted that apart from mainland China, especially Shanghai that was largely affected by city lockdown in the second quarter, other Asia Pacific markets with limited office supply like Singapore, Seoul, and Sydney have seen escalating rental rates. This has resulted in occupiers having to plan ahead to secure space, which delivers an overall positive outlook for the market.
On the other hand, she noted that some office occupiers enjoyed rental discounts and more options to choose from. Such situation is expected to last longer in Hong Kong, mainland China and some of the Southeast Asian markets.
Apart from that, Asia Pacific has also seen a rising trend of flight to quality, which is in line with a company’s workplace transformation goals, as well as environmental, social, and governance (ESG) initiatives.
One of the efforts under ESG is to relocate to office towers with green and sustainable features. However, relocating to another office space has its fair share of challenges.
“I think there are a lot of discussions on whether these relocating moves involve downsizing and we know this is true but most of them are cost and space neutral. It’s a trend we are seeing in Tokyo, Taipei, and several Australian markets,” Choi said.
“However, going forward I think there may be some resistance to relocation due to the sharp escalation of costs. This could potentially lower the occupiers’ intentions to relocate.”
To overcome this issue, Choi advises some office landlords to offer better incentives, extend the free-rent period, and provide turnkey solutions to lure office tenants.