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Technology companies in Asia Pacific are trading up their real estate

Growth in sector means tech players are leasing top quality office space


​SINGAPORE, 12 January 2017 – The technology sector has upgraded its image with first-rate office space in prime office locations. "Silicon Valley"-like pockets have popped up across Asia in cities such as Shenzhen and Bengaluru. Similar to financial services companies clustering near stock exchanges, tech companies are building hubs in Asia to aid their business growth, with prime office locations providing better access to talent pools. Firms, including the major hardware designers, internet and e-commerce players, are no longer relegated to less expensive, lower quality buildings.

According to a new report from JLL, which analysed occupancy across 17 cities in Asia Pacific, tech companies are occupying a substantial share of Grade A office buildings and business parks. In some markets, tech firms occupy more than 20 percent of Grade A space, including Indian cities New Delhi, Mumbai, Bengaluru, Chennai, as well as Tokyo, Bangkok, Manila and Sydney.

The largest tech occupier categories so far consist of Internet companies such as Google and Baidu, hardware designers like Cisco and Juniper, as well as e-commerce companies similar to Amazon and Flipkart.

"The tech sector is making a substantial contribution to occupier demand for investment grade office space," says Chris Clausen, Senior Research Manager, JLL Asia Pacific. "In Asia Pacific, one in six square metres of Grade A office space was leased by tech firms, supporting rent growth across the region and rental income growth achieved by investors in Asia Pacific office assets."

With technology companies expanding rapidly in the region, prime office locations have become key in attracting and retaining talent – the number one driving factor tech firms cite when selecting an office location.

"Technology firms recognise the importance of hiring and retaining key talent to the success of their business—therefore, the location of the office where they will spend much of their working life is critical," adds Clausen.

The top three factors driving companies' office location choice include access to talent, supportive government policies, and cost. Supportive government polices include incentives such as tax holidays and rental rebates, and has been observed to be particularly attractive to companies. Cost remains an important factor too, with several tech companies exploring shifting data centres off-site as one of their cost-cutting strategies.

For more information, download Tech firm office location choice—how does it work in Asia Pacific.

 

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About JLL

JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate.  JLL is a Fortune 500 company with, as of December 31, 2015, revenue of $6.0 billion and fee revenue of $5.2 billion, more than 280 corporate offices, operations in over 80 countries and a global workforce of more than 70,000.  On behalf of its clients, the company provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. As of September 30, 2016, its investment management business, LaSalle Investment Management, has $59.7 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.

 

JLL has over 50 years of experience in Asia Pacific, with 36,000 employees operating in 94 offices in 16 countries across the region. The firm won 15 awards at the International Property Awards Asia Pacific in 2016 and was named number one real estate investment advisory firm in Asia Pacific for the fifth consecutive year by Real Capital Analytics.  www.ap.jll.com.