Space for rental negotiation is limited in the premium office sector given low vacancy rates and modest increases in rents.

• As Taiwan’s exports face headwinds, the Directorate General of Budget, Accounting and Statistics has further revised the annual economic growth rate down to 2.04%.
• A hiring freeze and layoff s among multinational financial and technology companies have led to a cautious budget. In addition to rents, higher refurbishment costs and longer times for renovation have also impacted tenants’ willingness to relocate.
• Leasing activity has seen a slight improvement, however, and the vacancy rate in Q2/2023 nudged up slightly to 2.9% with lease surrenders still taking place.
• The completion of the Fubon A25 Building next quarter will increase office stock in the Xinyi district up by 10%, which is expected to push the vacancy rate up to 8%.
• As carbon reduction and sustainability become more important, landlords of prime office buildings are trying to provide services such as renewable energy acquisition to improve competitiveness.