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• The Asia Pacific flex space market continues to display stable growth, with the total volume of flexible office space in the region reaching 87 million sq. ft. as of March 2023, an increase of 6% from September 2022.
   
• New flex space supply in Delhi NCR and Bangalore accelerated from 2022, with the two cities witnessing the addition of a combined 3.1 million sq. ft. of stock in Q1 2023. With leasing by flex space operators remaining robust in Q1 2023, the pace of new flex centre openings over the remainder of the year in these two markets is expected to be brisk. Weaker markets included Melbourne, where the potential insolvency of a local flex space operator resulted in a drop in flex office stock.
   
• Flex office penetration in the overall office market was steady at about 4% as of the end of March 2023. The proportion of flex space in Grade A office stock continued to increase, rising to 3.5% from 3.1% in September 2022, reflecting strong demand from flex space operators seeking to upgrade their centres to Grade A office buildings. 
   
• Ongoing economic uncertainty is strengthening the importance of portfolio flexibility and prompting a greater focus on cost management, driving occupier demand for flex space. CBRE’s 2023 Asia Pacific Occupier Survey found that more than half of respondents believe their portfolios to be under-allocated to flexible office space and intend to increase their use of it.
   
• Other key trends observed by CBRE in H1 2023 include tech firms’ continued dominance of usership of flex office space; CapEx concerns driving a preference for dedicated space such as enterprise solutions and strong demand for event space and access passes.

This report was originally published in https://www.cbre.com/insights/briefs/agile-real-estate-infographic-h1-2023-asia-pacific-flexible-office-market

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The office sector remains a key focus for Asia Pacific investors optimistic about the long-term fundamentals.

• Within APAC, Melbourne and Tokyo stand out on the path to value stability and recovery along with Copenhagen, Toronto and San Francisco at the global level. 

• While core offices remain a top pick for investors in APAC and EMEA, substantiated by current office investment volumes, there is a very different narrative in North America.

• Office occupancy levels in APAC are averaging 80%, and office density remains high. In Europe, occupancy is back to 65% and in North America, rates are at 50%.

• Seoul and Singapore recorded net absorption 30% above historical averages with both markets recording falling vacancy rates over 2022, contrary to most major markets globally. 

• Although limited sales transactions occurred over Q1 2023, we anticipate market sentiment will recover as an expected peak of the interest rate cycle comes to fruition over H2 2023 and equips investors and vendors with clarity and confidence regarding asset values and the cost of borrowing across the region.

 

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While tenant enquiries and site visits remain frequent, momentum cooled from the previous survey. Although enquiries and inspections in mainland China were active, occupiers’ cautious stance resulted in a limited number of actual transactions.

Expansionary demand grew across the office and retail sectors but fell for industrial. Australia and Japan registered a rise in requirements for more space, while India continued to see robust new set up and expansion demand.

Two-thirds of respondents expect rents and incentives to stay flat. The view in mainland China is slightly negative, with rents forecasted to decline.

Despite falling slightly from the previous quarter, leasing sentiment in most markets stayed in positive territory. Sentiment in mainland China remains negative and will take more time to recover.

This report was originally published in https://www.cbre.com/insights/briefs/asia-pacific-leasing-market-sentiment-index-june-2023

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Despite a challenging global economic environment and recent muted investment sentiment, the Asia Pacific commercial real estate market has remained largely resilient. In particular, the office sector remains an important asset class in the region, and one that investors should consider.

This report explores the opportunities presented by investing in the office sector in Asia Pacific, the supporting data and factors that differentiate this asset class from others, as well as the implications and potential strategies for investors.

Key highlights include:

• Deal flow in Asia Pacific remains resilient despite weaker investment sentiment
• The outlook for longer-term office demand is positive
• Asia Pacific is leading office attendance globally
• Price and rental correction has created a window of opportunity
• CBD offices can aid portfolio diversification

This report was originally published in https://www.cbre.com/insights/reports/asia-pacific-major-report-why-asia-pacific-offices-are-different-and-now-is-the-time-to-invest

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