Demand for asia pacific office space remains flat

Office demand in Asia Pacific moderated further in Q4 2012, according to CBRE Thailand, as occupier sentiment remained cautious in light of the subdued global economic outlook.

Most markets saw leasing activity weaken in 2012 on a year-on-year basis with the exception of Tokyo and Seoul where large amounts of new supply prompted occupiers to upgrade to higher quality buildings.

The most active markets were in Southeast Asia where multinationals retained a strong appetite for Grade A space in Bangkok and Manila.

The CBRE Asia Pacific Office Rental Index recorded a marginal decline of 0.14% quarter-on-quarter in Q4 2012, the second consecutive quarterly decrease. Although rents have been relatively flat for the past five quarters they weakened by 0.3% on a year-on-year basis the first such decline since 2010. In the current cycle overall Grade A rents peaked in Q2 2011.

Rents in most markets across the region were relatively flat during the period, with only Bangalore, Bangkok and Manila recording significant gains.

The overall vacancy for the Asia Pacific region increased to 9.6 per cent in the last quarter of 2012, with the vacancy rate in almost all markets rising by the end of the year, despite a number of major markets recording a decline.

Looking ahead, CBRE predicts that lending activity will improve in the second half of 2013 on the back of optimism surrounding a global economic recovery.

"Occupiers in the region look set to remain cautious," explains the report, "despite the slight improvement in business and economic sentiment. Leasing activity will continue to be dominated by local and regional players and not by multinationals.

"Western companies will continue to exhibit strong occupier cost-control motivations, portfolio rationalisation and decentralisation. Many will seek opportunities to adopt alternative workplace strategies."

Read the full report here.