APAC office leasing demand growth to hit up to 15% this year

Technology and financial companies are driving the robust leasing activity.

According to CBRE, in 2021, office leasing activity in Asia Pacific has gradually improved as demand recovered from last year’s low. Net absorption increased by approximately 20% y-o-y in H1 2021, driven by North Asia’s strong performance. 

Full-year leasing demand is expected to reach 10-15% y-o-y, up from a forecast of 5% y-o-y growth at the outset of the year. Resilient markets like Singapore, Taipei and Seoul are expected to see Grade A rents rise above pre-pandemic levels by 2023.

Some large occupiers may postpone long-term leasing decisions until clearer timelines emerge for a return to the office. For the rest of the year, regional office market conditions will continue to favour tenants as around 60% of full year new supply is due to come onstream. 

“Office occupiers should take advantage of current leasing market weakness by pursuing lease negotiations or consider flight to quality relocations with an eye on future proofing portfolios by building greater flexibility into leases; incorporating sustainability and wellness features into workplaces, or establishing and implementing clear guidelines for hybrid working,” said Ada Choi, CBRE’s Asia Pacific Head of Occupier Research, Data Intelligence and Management.

Here’s more from CBRE:

Office leasing demand gradually improved in H1 2021 from last year’s low point. Net absorption increased by about 20% y-o-y in the first six months of the year, driven by strong performance in North Asia. CBRE has revised up its full-year leasing demand forecast to 10-15% y-o-y from 5% y-o-y. 

The recent uptick in leasing activity has been driven by domestic technology and financial companies. While the bulk of activity has involved cost reduction or cost neutral relocation, there have been signs of a resumption in expansionary demand, albeit for smaller spaces. CBRE’s latest Leasing Occupier Sentiment Survey published in July confirmed the recovery story, noting that 32% of major leasing enquiries in June were for more office space, compared to 25% in May.