Domestics will drive office demand in Asia in 2015, while multinationals will be wary.

 

Domestic and Asia-regional enterprises, according to CBRE Asia, will drive leasing markets in APAC in 2015, aggressively growing in core central business districts and outside their home markets. Japanese and South Korean businesses will continue to expand in Southeast Asia's rising markets, while Hong Kong will serve as a stepping stone for Chinese businesses looking to expand farther into Asia. Companies will be concerned about rising occupancy expenses, while landlords will prioritize tenant retention. house for sale

Manish Kashyap of CBRE stated, "Landlords are finding it difficult to retain excellent tenants as many cities expand core business centers beyond conventional central business districts and there is a broad flight to quality movement among tenants. Domestic and Asian-based companies are increasingly establishing themselves as tenants in core areas, displacing many multinationals who have relocated to more cost-effective places. Landlords who are losing tenants to new buildings will need to be more flexible in their commercial negotiations and should communicate with renters ahead of lease expiration, taking into account the decision-making process. Domestic and Asian-based companies typically make decisions faster than global corporations, which can require extensive approval processes for major headquarters changes.

CBRE recommends landlords to restructure existing leases as soon as possible and give incentives to negotiate longer-term leases in order to retain large and/or high-quality tenants, while also ensuring that their assets stay appealing through regular refurbishment, upgrading, and enhancement work. This strategy is especially important for owners of old and dated office buildings in traditional central business areas, such as Guangzhou and Kuala Lumpur, where a high amount of new supply will be completed in 2015."

For 2015, the following are the key themes in the APAC office sector:

New Delhi, Mumbai, Bangalore, Shenzhen, Shanghai, and Jakarta will account for more than 75 percent of new office supply (73 million sq. ft. NFA, up from 14 million sq. ft. in 2014). While new supply will continue to exceed demand, the market imbalance will be lower than the early figures suggest.

Tech organizations, particularly internet-based firms and e-commerce industries, will continue to drive office demand, particularly in countries like China, Taiwan, Tokyo, India, Singapore, Sydney, and Melbourne. The financial sector's demand will be uneven, as large global banks continue to downsize, but Asia-based corporates in this area are optimistic.

Most cities in the region will see vacancy rise beyond the long-term average, providing occupiers with a plethora of premium office space options. Landlords will retain the upper hand in tightly held markets such as Beijing, Hong Kong, Auckland, Bangkok, Tokyo, Manila, and Singapore, but will need to be more flexible when it comes to rental talks.

Office rents in the region will continue to rise steadily, albeit at a slower rate of 3.2 percent, thanks to Tokyo, Bangalore, and Singapore. Meanwhile, laggards in 2015 will be headed by Seoul, where rents are predicted to fall by 3.5 percent, and Brisbane, Guangzhou, and Shanghai are expected to see negative rental growth.

From 3.7 percent in 2014 to 3.2 percent in 2015, capital value growth is likely to slow. Only Tokyo, Singapore, Auckland, Bangalore, and Manila are likely to have capital value increase of more than 5%.

Most organizations will be concerned about rising occupancy expenses, with larger occupiers focusing on workplace improvements and renewing leases in key sites. In addition to portfolio rationalization measures, multinationals will focus on long-term strategic actions, such as purchasing rather than leasing space.

Jonathan Hsu, Director of Research for CBRE Asia Pacific markets, also had something to say about it "Due to continued growth in business investment, corporate revenue growth expectations, and a strong job market, Asia Pacific will see solid office leasing momentum in 2015, with an unemployment rate ranging from 1% to 7%. The shaky global economic recovery, on the other hand, will keep occupiers cost-conscious and risk-averse. When it comes to leasing decisions, we expect international firms to carefully balance cost management, space efficiency, and expansionary requirements, while domestic corporations will become more rational in reducing the development of occupation expenses. Despite the slowing of China's economic growth, this market will remain the primary target of business expansion, particularly given the continuous growth of the e-commerce industry and preferential measures to promote the development of cross-border e-commerce."