Local Covid Outbreak Slows Leasing Activities; Sentiment for Future Rental Growth is Limited
- Rents increased in Q2 2021 though the vacancy rate rose due to the new supply and some tenants downsizing.
- Through end-2021, with the local Covid outbreak we think tenants will prioritize lease renewals amid limited available supply. With true vacancy below 4%, landlords still expect rents to increase. But we think the rental growth potential is limited, with a 1.5% YOY growth forecast for 2021.
- Covid is refining the workplace in Taiwan, and occupiers are gradually adopting a more activity-based working (ABW) office design. With technology supporting the ability to work remotely, occupiers are planning strategies to offer workspace beyond a single location. With the lack of large contiguous spaces and increased workplace efficiency, we recommend a hub-and-spoke model or decentralization.
