Tech firms to dominate APAC office leasing market

China’s tech titans alone, which includes ByteDance and Tencent, will account for 15% of the region’s total at 4 million sq m.

Technology firms, led by Chinese groups, are expected to lease over 5.5 million sq m (59.2 million sq ft) of Asia Pacific’s Grade A office space from 2020 to 2025, or over 20% of the 26.4 million sq m regional total, reported Mingtiandi citing Colliers International.

China’s tech titans alone will account for 15% of the region’s total at 4 million sq m.

“Colliers expects Asian technology occupiers, led by expanding large Chinese groups, to dominate office leasing markets in 2021 and coming years, helping determine rents, incentives and deal structures,” the property consultancy said in its Asia Pacific Property Markets: Themes for 2021 report and quoted by Mingtiandi.

Singapore, for instance, emerged as a focal point among Chinse tech giants in 2020 as they seek to expand in Asia Pacific. Last year, several big players unveiled plans to expand or set up regional headquarters in the city-state and the trend continued into 2021.

In May 2020, e-commerce giant Alibaba acquired a 50% stake in the AXA Tower from Perennial Real Estate Holdings-led consortium, in a deal valuing the office building at $1.68 billion.

Alibaba, which is already an anchor tenant of AXA Tower, teamed up with the consortium to redevelop the 1.05 million sq ft property into a mixed use development project with a gross floor area of up to 1.55 million sq ft.

Bloomberg also reported last October that ByteDance, owner of video-sharing app TikTok, leased three floors spanning over 60,000 sq ft at One Raffles Quay. A day after, WeChat owner Tencent was reported to have leased 10,000 sq ft of co-working space at OCBC Centre East at Raffles Place.

Lazada, Alibaba’s Southeast Asia-focused online marketplace, reportedly leased 140,000 sq ft at 5One Central in Bras Basah last month, while TikTok leased two floors spanning 58,000 sq ft at GuocoTower in Tanjong Pagar.

Colliers noted that leading Chinese tech firms such as Alibaba, Baidu, Tencent, JD.com, Meituan and Xiaomi are some of the fastest-growing groups in the Asia Pacific that are changing the shape of the region’s office demand.

For headquarters purposes, these tech firms occupy 2 million sq m of office space regionwide, which represent 10% of prime office stock in major Chinese cities such as Shanghai, Beijing, Hangzhou and Shenzhen.

As competition for recruitment heats up in the technology sector, occupiers may have to focus on retaining and attracting talent, with appealing office spaces becoming a selling point to attract new hires.

Colliers believe the continued growth of tech occupiers will make them appealing to building owners.

In Singapore, it expects Shenton Way and Tanjong Pagar to be one of the centres of office leasing activity for such firms.

Source: CommercialGuru, 9 February 2021