Cost drives lease renewals and relocations in Asia Pacific

Uncertain economic conditions push occupiers to prioritise lower rent.

Cost considerations remain the primary factor influencing office lease renewals and relocations in the Asia Pacific region, according to Ada Choi, Head of Research at CBRE Asia Pacific.

Choi highlighted the growing importance of cost control in occupiers’ decisions, with 65% of tenants opting to renew their leases due to lower rent and flexibility in lease terms.

"The current economic environment is quite uncertain. So the cost is becoming the most important factor to influence both renewal and relocation decisions," said Choi. For many companies, renegotiating lease terms with existing landlords is a key strategy, as organisations aim to reduce expenses in a challenging financial climate.

CBRE’s 2024 Asia Pacific Office Occupier Survey reveals that office utilisation rates have stabilised, further reinforcing the trend towards flexible working. Over 60% of occupiers stated that their office attendance had reached a steady state, up from 50% in 2023.

Relocation decisions are similarly driven by cost considerations, particularly as some markets experience an increase in office supply. This allows companies to secure better deals in core locations, while also reducing their overall occupancy costs. 

In terms of office efficiency, Choi noted, "For those that want to further boost workplace efficiency, they are investing in the user experience within the workplace, upgrading the old for experience, and also identifying the office utilisation pattern.”

One challenge that companies face is the so-called "Friday syndrome," where office utilisation is significantly lower on Fridays. "We know that this year, Friday’s utilisation is the lowest across the whole week," Choi stated. To counter this, companies are introducing policies or events to engage employees and encourage them to return to the office on Fridays. By addressing these usage patterns, businesses hope to optimise office space and improve overall workplace efficiency.