Prime office yields in Taipei rose slightly to 2.56% due mainly to a number of vendors lowering asking prices to lure potential buyers. However, the persistent low interest rate environment means most investors are willing to bide their time.
Although total office net absorption declined from 14,728 ping in Q3 2018 to 11,642 ping in Q4 2018, this was still the third highest level recorded since 2008. Leasing activity mainly involved relocations for upgrading. Tech companies retained a strong appetite for quality office space, while several financial services firms were in expansion mode.
Grade A office leasing activity is expected to remain strong, supported by expansionary demand from tech firms. Average Grade B office vacancy is forecasted to remain under 5% in the next few quarters amid steady relocation demand from local SMEs.