Apac office occupancy climbs to 88% in 1Q2024, beating Europe and North America: Savills
By Nicholas Lam
/ EdgeProp Singapore |
Average office occupancy rates in Asia Pacific (Apac) grew to 88% in 1Q2024. (Photo: Savills Singapore)
Average office occupancy rates in Asia Pacific (Apac) grew to 88% in 1Q2024, an improvement from a year ago when the average occupancy rate in the region was 84%, according to a market report by Savills.
The performance of the Apac office market, in terms of occupancy rate, makes it higher compared to the regional office markets of Europe (59%) and North America (53%).
According to the Savills report, the disparity between office occupancy rates in Apac compared to Europe and North America can be attributed to differences in cultural and social norms, housing costs, and commuting expenses between the regions.
“Even within the same organisation, there’s a need for flexibility as cultural nuances necessitate adjustments from country to country” says Simon Raper, head of workplace strategy for Apac and Singapore at Savills.
For example, the US is suffering from lower office occupancy due to a longer commute time as many workers moved to more affordable areas further from cities during the pandemic.
US cities such as San Francisco and Los Angeles are still seeing occupancy rates of below 50% in 1Q2024.
In Apac, countries with a high rate of intergenerational living and smaller homes, such as Hong Kong and China, tend to drive more workers to the office.
Meanwhile, in Japan, traditional working models coexist with flexible arrangements due to high commuting costs, and younger generations are embracing this flexibility.
Singapore’s office occupancy rate in the first three months of this year stood at an average of 94%, and average occupancy rates are expected to remain high for the ‘foreseeable quarters ahead’, says Alan Cheong, executive director of research & consultancy at Savills Singapore.
“Although some companies are adopting hybrid and workplace solutions to optimise space usage, thereby reducing their office footprint, for this and next year, the average supply of new Grade A office buildings coming on stream from 2024 to 2027 is about 660,000 sq ft (net floor area), just below the 10-year average of 696,000 sq ft (2014 to 2023),” says Cheong.
He adds that some Grade B, as well as older office buildings in Singapore, may see occupancy rates decline as new supply comes on stream. “For the latter, they may have no choice but to undergo extensive refurbishment or complete redevelopment,” he says.
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