Most Office Space in Asia Occupied by Internet Firms

Asia’s boom in social media and e-commerce has initially influenced only the trading floor, but has now spread to real estate as well.

It appears that in the second quarter, most office space in Asia was occupied by Internet companies like Yahoo! Japan and LinkedIn. Mainly last quarter in Japan, Singapore and China, these firms leased a total of 1.1 million square feet. This represents almost 22% of all the office space available for rent during the quarter.

The appetite for expansion was fueled by the new capital lured to the sector by the social networking and the expanding Asian market for online shopping.

At a global level, it appears that Asia has the fastest growth in social media and e-commerce, China in particular. Alibaba Group Holding had an unbelievable expansion that has determined a huge growth in China’s online retail volumes which will surely reach US$1.5 trillion over the next 10 years, driven by a stable mobile-device penetration and rising middle class. For example, LinkedIn was just launched in China because of its enormous market, even though the government decided to filter some of the content. This has, of course, drawn objections from human-rights groups.

Experts say that the Asian consumer base, especially the middles class, will show a continued growth over the next decade or more.

Financial companies are cutting back during strict regulatory oversight and the space left vacant is immediately taken up by Internet companies. Records show that Internet companies occupied 14$ of the new leases available in the region in the last quarter.

LinkedIn had the most dynamic expansion process as this social networking company has taken up over 50,000 square feet in Marina Bay Financial Tower 2 in Singapore, a space that was previously used by Barclays PLC. Its growth continued by signing new leases in Hong Kong and Sidney as well.

Any investor knows that Singapore opens the way to the Southeast Asian market and soon new tech companies will lower vacancy and determine a higher price for leasing office spaces.

Yahoo! Japan has also made serious changes to the market by leasing 700,000 square feet in Tokyo’s Kioicho Project, where it used to be the site of Akasaka Prince Hotel which will be completed in 2016. Furthermore, during the second quarter Amazon and Chinese e-commerce firm JD.com occupied a space of over 300,000 square feet in Beijing.

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