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News Release


Jones Lang LaSalle’s survey of the Taipei Grade A Office market over the first quarter 2010 revealed the following highlights

  • As the first quarter of the year is regarded as the traditional slack season, few transactions were seen during 1Q10 and the current net take-up came from the leasing contracts in 2H09. The overall vacancy rate decreased from the 4Q09 figure of 16.1% to 15.0%. It is clear that no supply was added to the market. Moreover, companies returning space had eased due to the decreasing cost of office rent.
  • The first quarter of 2010 recorded a positive net-take up for the second successive quarter at 5,898 ping, which was also an improvement from 4Q09. Our records indicate that some well-known foreign enterprises were planning to relocate to decentralized areas, and that there was an accumulated number of returning space at 25,000 ping. Therefore, the Grade A office market is expected to face a challenging year.
  • The overall rental rate declined by 0.16% to NTD 2,367 per ping per month. In addition, the average rental rate in Dunhua S district saw a small rebound at 1.41% to NTD 2,355 per ping per month. Although rents in the remaining districts have decreased, the rental decline has slowed down since 2Q09. 
  • In Xinyi district, an international financial organization relocated to Taipei 101 building this quarter, recording an absorption of almost 1,000 ping. Additionally, a local real estate company increased its office space, while some small and medium firms relocated to this district. Net absorption in Xi-yi district was 4,415 ping, with an accommodating vacancy decline of 2.0% to 19.47%.
  • The Dunhua S and Non-core CBD districts witnessed a slight decline in the vacancy rate due to a small number of transactions seen during the quarter. In one transaction, a local bank, decided to increase its office space by 2,015 ping for self-use, with a descending vacancy rate of 2%. Dun-Hua S has a declining vacancy rate of less than 1%.
  • The Grade A office market in Taipei, like other Asian markets, was generally moderately affected by the global economic crisis. Although the market witnessed an improved rental and vacancy rates compared to the previous quarter, it has not yet fully recovered to reflect the rates present in the period 4Q09 before the crisis.
  • The market will enjoy a stable and positive take-up before the next influx of new supply. Rental decline has already eased and stabilized. With supply coming from Shin Kong’s A12 development in Xinyi and Taipei Financial Center in Song-san adding a combined 18,000 ping of Grade A space, the market will prove to be challenging as demand for Grade A office space remains weak.

Summary of 2010 Q1 rent and vacancy values for the Grade A office market:

Gross Achievable Rent (Grade A) (NTD/ping/month)
Change from last Quarter
Vacancy Rate (Grade A)
Change from last Quarter




Dunhua North




Dunhua South



Non-core CBD



Average for Taipei






  • The national economy indicators continue to improve. However, the rental cost is still a heavy expense to firms that are likely to rationalize their portfolio due to the trend of cutting office space expense, to enable investment in their workface. Our record indicated that an accumulative 25,000 ping would move out to decentralized areas, such as Nan-Gang IT park, Nei-Hu IT park and the Grade B office space. This includes some well-known international enterprises that previously resided exclusively in the Grade A office space.
  • Much like the other Asian countries, Taiwan was also affected by the global financial crisis as it recorded a high vacancy rate. The average office vacancy period rose from 6 months to 10 months in Taipei. Landlords geared to subdue the situation by offering favorable rental packages for tenants and attractive commission deals for agents. For instance, the achievable rent, which was at NTD 3,000 per ping per month, was reduced to NTD 2,700 per ping per month, with a 10% fall. Moreover, landlords proposed a higher commission to agents, from an original 1 month to 2 months’ regarding the commission to agents in terms of easing the high vacancy rate.
  • The prime office space will take a long time to recover from the global recession. Xinyi was the most affected among the districts in Taipei. Most occupiers renewed their leasing contracts in 2H09, while some landlords and occupiers agreed to renew leases. However, an IT firm decided to move out a decentralized area to seek a lower rental cost. Our records indicated that the completed Shin Kong’s A12 development added an accumulative 7,500 ping of negative take-up and a further 10,000 ping, bringing the total negative take-up in this area to 175,000 ping.
  • On the demand side, three international financial organizations will relocate to Xinyi, bringing a positive take-up of 4,000 ping to the district. With the aforementioned negative take-up and a relatively small positive take-up, Xinyi will face a rising vacancy rate and a declining rent. In 2009, the Walsin Lihwa and Kelti buildings added a combined 18,000 ping to the market, causing the overall vacancy to rise sharply from 13.30% to 23.33%.

Investment market:

  • A loose monetary policy and a low interest rate lead to the excess liquidity in the market as a result of rising property prices. Some Asian countries have decided to increase the benchmark interest rate to control the excess liquidity in the market. It is predicted that the Central Bank of the Republic of China (CBC) will raise the discount rate to 1.25% by 2H10. Therefore, banks will tighten up on the credit market, especially on construction/developer loan origination, to calm the increasing property prices.
  • Our latest Global Capital Flow report indicated that investment volumes in the Asia Pacific, which amount to USD 66 billion, fell 23.0% in 2009 compared to those in 2008. We are expecting the Asian economy to improve and  the investment will grow by more than 20% in2010. 
  • The number of Chinese tourists in Taiwan continues to increase, with 107,628 registered visitors and a growth of 154.75% y-o-y. The Taiwanese retail and hotel markets benefited from the rising sales, which helped improve the overall economy and bring property values to their peaks.
  • In 1Q10, a total of NTD 14 billion worth of investment-grade properties changed hands. Three life insurers – Cathay Life, China Life, and Bank Taiwan Life – were involved in transactions that accounted for NTD 4.8 billion.
  • The MassMutual Mercuries Life Insurance building changed hands this quarter. From NTD 1.7 billion to NTD 2.3 billion, it saw an increment in investment return of NTD 0.6 billion within a year. However, rising property values caused the investment return to decline. Among investors, life insurance and financial holding companies benefited more from the lower capital cost, with foreign investors staying on the sidelines.
  • Despite Nei-Hu Technology Park witnessing low returns and a high vacancy rate of around 30%, four deals were traded over 1Q10. Additionally, supply in this area is expected to reach 36,000 ping this year. The main reason is the ability to acquire CBD property was becoming difficult due to the high property prices.

Outlook for the Taipei office market:

  • With the worst of the economic crisis finally over, Taiwan’s economy is slowly recovering. Although office leasing suffered from the increasing vacancy, this situation is improving with the positive take-up seen for two consecutive quarters. However, we are still viewing any market changes cautiously. The rental changes depend on the actual changes in 2H10, with rentals estimated to witness a negative or positive change of 3.0%.
  • Nei-Hu Technology Park is becoming a popular area, with firms seeking to reduce rental costs as rent is relatively affordable and the area is accessible via the MRT line. Nam-kang Technology Park offers similar advantages and continues to remain very popular among large IT companies due to the availability of buildings with high technical specifications.
  • Landlords are willing to offer a preferable rental package to attract new occupiers. Approximately 190,000 ping of leaseable area will expire within the next three years, while 25.0% of the tenants may choose to relocate. Demand for the Grade A office market is still restrained, but the office market is expected to see a rebound after 2010 as the economy recovers.
  • Most firms are maintaining a cautious and conservative attitude toward expanding office space. In addition, to avoid extra expenses, the leasing term has been adjusted from two to three terms and above, given that a term is valid for around three-five years. The situation wherein MNCs residing only in the Grade A office space to  maintain their respective corporate image is changing due to the rising cost of rents.
  • The loosening cross-strait policy and the anticipated signing of the Economic Cooperation Framework Agreement (ECFA) became the main motivation for Chinese firms setting up offices in Taiwan. The current Chinese firms in Taiwan comprise the airline industry and are mainly located in Dunhua N district due to its proximity to the airport. We predict that the actual demand for Grade A office has a long way to go.

Sherry Wu made the following comments:

The rental cycle for Taipei’s Grade A office space is around five years. Although the rental rate is witnessing a decline, we can expect the rental rate to rise if the overall economy continues to recover, although this is still uncertain. Additionally, with the view of saving rental costs, some enterprises are likely to move out to decentralized areas, such as Nei-hu and Nan-gang, where there is easy access to public transportation, shops and services. This trend may have a serious impact on the Grade A office market

The office market in Xinyi is also worth noting,  as most of the leasing deals in the district have closed at end-2009. Vacancy is expected to peak with the addition of the Sin-Kang A12 development, which will account for 10,000 ping of new supply. When Taipei 101 was completed in 2005, the district’s vacancy rate registered a rise of about 20%. The same situation was seen after the completion of Walsin-Lihwa and Kelti buildings in 2009. The office market will moderate due to the slow demand recovery and the massive supply this year. This is an ideal time to negotiate lease agreement for potential tenants.