Apac Office Occupancy Climbs 88 1Q2024 Beating Europe And North America Savills
The latest market report by Savills reveals a positive trend in the office occupancy rates in Asia Pacific (Apac). The average occupancy rate in the region has increased to 88% in the first quarter of 2024, compared to 84% a year ago. This growth can be attributed to various factors such as cultural and social norms, housing costs, and commuting expenses.
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According to the report, Apac performs better in terms of office occupancy rates compared to Europe (59%) and North America (53%). The difference can be explained by the varying cultural and social norms, which require businesses to adapt and adjust accordingly. “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.
The longer commute time in the US has resulted in lower office occupancy rates as workers have moved to more affordable areas further from the cities during the pandemic. Cities like San Francisco and Los Angeles are still experiencing below 50% occupancy rates in the first quarter of 2024. On the other hand, in countries like Hong Kong and China, where intergenerational living and smaller homes are common, workers are driven to the office more often.
Japan has a unique situation where traditional working models coexist with flexible arrangements due to high commuting costs. The younger generation is more open to this flexibility, which contributes to the high office occupancy rates in the country.
Singapore, on the other hand, has maintained a high average occupancy rate of 94% in the first quarter of 2024. This trend is expected to continue in the foreseeable future, according to Alan Cheong, executive director of research & consultancy at Savills Singapore.
Despite some companies adopting hybrid and workplace solutions to optimize space usage, the average supply of new Grade A office buildings coming on stream from 2024 to 2027 is slightly lower than the 10-year average. This indicates a stable market for office spaces in Singapore in the coming years. However, some Grade B and older office buildings may experience a decline in occupancy rates due to the influx of new supply. In such cases, extensive refurbishment or complete redevelopment may be necessary.