Reworking Lease Expires

THE ASIA PACIFIC OFFICE OCCUPIER MARKET REMAINS ROBUST. ANALYSING THE REGION’S TOP 25 MARKETS, ALMOST 230 MILLION SQUARE FEET (MSF) MORE OFFICE SPACE IS OCCUPIED AS AT Q2 2023 COMPARED TO Q4 2019. This stands in stark contrast to other regions. In addition, a further 250msf of space is forecast to be absorbed through the remainder of 2023 to end-2026 and with that, most markets are forecast to experience rental growth over the next few years (Figure 1). In short, for occupiers looking for the most favourable lease terms, the window of opportunity is now open.

Whilst looking at movements in rents is critical for occupiers, perhaps the most important aspect to track is the difference between the rent being paid, as per the lease terms, against the current market rental level. This will give occupiers a view on whether they have positive or negative rental exposure in the prevailing market conditions, which then prompts subsequent actions. Here it is important to understand two terms:

FIGURE 1: PROPORTION OF MARKETS EXPERIENCING RENTAL GROWTH, STABILITY AND DECLINE (Y-O-Y)

Where a tenant is paying below average market rents UNDER-RENTED

OVER-RENTED Where a tenant is paying above average market rents

Decline

Growth

Stable

Source: Cushman & Wakefield

2

3

CUSHMAN & WAKEFIELD

REWORKING LEASE EXPIRIES