APAC offices to become ‘out-of-date’ despite strong growth
CHICAGO, UNITED STATES — Despite strong growth indicators, Cushman & Wakefield, a global commercial real estate services firm, warns of the rising risk of office obsolescence in the Asia-Pacific (APAC) region.
In its latest study, C&W revealed that around 43% of prime-grade stock in the region is without sustainability accreditation, and half of the office supply is of secondary grade.
Markets with rapid development, like mainland China and India, face young prime stock that often lacks sustainability credentials. Additionally, due to impending obsolescence, these markets have a significant amount of secondary stock requiring attention, particularly outside central business districts.
On the other hand, more mature markets, such as Australia, Japan, and Singapore, are challenged by older existing stock, slowed growth drivers, and increased competition resulting from shifting occupancies.
Cushman & Wakefield emphasizes the need for landlords and investors to urgently consider measures like repurposing or repositioning assets while being aware of the specific risks tied to their assets and respective markets.
The APAC region boasts strong growth drivers, including the anticipated creation of nearly 15 million new office jobs by 2030. Moreover, it has a higher post-COVID return to office rate, potential workplace de-densification in certain areas, and more youthful business districts than other regions globally. These factors provide some insulation against major global challenges.
However, the firm points out that the rise in office vacancies in the region since mid-2018 is a concern. Even though there’s a robust demand for premium locations, areas with an oversupply or high vacancy rates could face significant challenges in attracting tenants.
