Regional office rents on the rise

Regional office rents on the riseImprovements in office leasing activity are expected throughout the Asia Pacific region, with absorption gains on track to reach a seven-year high, according to Cushman & Wakefield’s latest forecast report.Expansion of the region’s economy will sustain an upswing in leasing activity in most of the 30 major markets tracked by the world’s largest privately‐held commercial real estate services firm.Construction will generally remain robust, but overall market conditions will diverge, with availabilities averaging seven to eight per cent in core markets and up to 18 per cent in emerging markets. Demand will remain strongest in markets with the best economic prospects – namely Tokyo, Bengaluru and Manila – as well as in those markets with huge pent-up demand from ultra-low vacancies, such as Shanghai, Beijing and Shenzhen.In Singapore, Grade A vacancies are expected to bottom out this year, but this will be temporary with significant prime deliveries scheduled for next year while demand remains muted by slower workforce growth. The greatest oversupply risks are in emerging markets that expect massive supply, including Chengdu and Guangzhou in China, Kolkata, Mumbai and New Delhi in India, and Jakarta in Indonesia.Cushman & Wakefield’s analysts say Sydney and Melbourne are “turning a corner” with solid job gains indicating that the services and construction industries are growing, in turn lifting leasing activity.Demand remains largely driven by legal, IT, accounting and finance companies seeking prestigious corporate addresses as they globalise.In other parts of Australia, conditions will remain “languid”. A weak mining sector will constrain demand in Perth and is expected to push vacancies to a high of 19 per cent through next year.Read Cushman & Wakefield’s latest forecast report.