The New Era of Strategic Maturity in the Asia-Pacific Office Market

The office market in the Asia-Pacific region is experiencing a significant transformation, entering a new era characterized by strategic maturity. This shift is driven by a decade of rapid expansion and an increasing demand for innovative workspaces. According to the report titled "Navigating the Expanding Market for Office Demands in the Asia-Pacific Region" by Cushman & Wakefield, the Grade A office stock in this area has doubled over the past ten years, reaching approximately 2.33 billion square feet across 39 cities. Notably, this increase is comparable to adding an office stock equivalent to Washington D.C. each year. The demand remains robust, with about 900 million square feet absorbed during the same period, predominantly in 17 cities in India, Southeast Asia, and mainland China.

"We are witnessing a fundamental shift in how tenants engage with office spaces in the Asia-Pacific region," stated Anshul Jain, CEO of Cushman & Wakefield for India, Southeast Asia, and the Asia-Pacific. "It's no longer just about expansion. Offices are evolving into platforms for brand expression, cultural alignment, and enhanced performance. From the stable demand in India to the changing industrial composition in Southeast Asia and innovation-driven growth in China, companies are prioritizing spaces that foster talent development, support ESG initiatives, and enable long-term resilience."

Factors Influencing Demand and Market Evolution

Over the past decade, vacancy rates have increased from 13% to over 18%, reflecting broader market evolution. As tenant selection criteria become more stringent, landlords are responding with smarter and more sustainable buildings. The three major growth engines driving this change are mainland China, India, and Southeast Asia.

Innovation-Driven Growth Reshapes China's Office Landscape

In China, the operational stock of Grade A offices has expanded to 640 million square feet, supported by sustained demand from the technology, media, and telecommunications (TMT) sector, professional services, and finance. Emerging industries such as AI, biotechnology manufacturing, and quantum computing are further fueling new demand. In Shanghai and Shenzhen, a total of 38 million square feet of new Grade A office supply is projected within the next year, exceeding the total supply in central London over the past five years. As tenants consolidate into higher-quality buildings, landlords are reallocating assets to meet ESG requirements and technological demands, emphasizing the ongoing trend towards quality. Tenants increasingly assess buildings based on operational performance, from air quality to energy systems, showcasing how real estate supports business strategies.

India’s Office Demand Driven by Global Capability Centers and Startups

India stands as one of the most resilient office markets globally, with projected net absorption surpassing 40 million square feet annually in major cities during 2023-2024. Given that around 50% of the world's Global Capability Centers are based in India, it's unsurprising that these centers account for approximately 30% of leasing activity in the country. Besides, the growth of the manufacturing sector and a vibrant startup ecosystem are creating new layers of demand, enhancing India's position as a hub for digital transformation and research and development.

Key cities such as Bangalore and Mumbai are leading the way, with Bangalore alone absorbing more office space in a single year than many European cities do in five. The trend is shifting towards Grade A+ buildings, where rental prices are 5-10% higher, and vacancy rates are 3-6% lower.

Diverse Sectors Propel Southeast Asia’s Office Market

The Southeast Asian office market continues to grow steadily, with operational Grade A properties now spanning 235 million square feet—an increase of 10% over the past five years. Despite high vacancy rates in most markets, top-tier developments in cities like Manila, Bangkok, and Ho Chi Minh City are achieving record-high rental levels. Prime Grade A spaces command a rental premium more than 20% above the overall Grade A market benchmark.

In cities like Hanoi, Kuala Lumpur, Singapore, and Bangkok, the expanding middle class and active consumer behavior have led to banks and financial institutions taking a leading role. Moreover, technology companies, IT/BPM providers, and healthcare-related enterprises are continuing to expand across the region, resulting in a more diverse and sophisticated tenant composition. Notably, despite the global trend toward hybrid work, many tenants in Southeast Asia are upgrading to higher-quality spaces rather than downsizing, thanks to a robust office culture and economic resilience.

Future Outlook

The Asia-Pacific office market is not only continuing to expand but is also reaching a period of maturity. Tenants are becoming more selective, landlords are pushing for innovation, and intercity competition is intensifying. The next phase will be defined by strategic restructuring, where real estate will serve as a foundation for branding, culture, and performance. "The office sector in the Asia-Pacific region is currently undergoing a significant transformation. The shift from quantity to quality is gaining momentum, with space quality, alignment with ESG goals, and the ability to support innovation emerging as new standards," says Dr. Dominic Brown, Head of International Research at Cushman & Wakefield.

You can download the full report here.

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is one of the world's leading commercial real estate services firms, publicly traded on the New York Stock Exchange. With approximately 52,000 employees in around 400 offices across nearly 60 countries, the company offers a full suite of core services, including facility management, transaction services, appraisal, tenant representation, leasing, and project management, anticipating a sales volume of $9.4 billion for 2024. With the corporate philosophy of "Better never settles," Cushman & Wakefield’s award-winning culture has been recognized and praised across the industry and business community. For more information, visit the official website at www.cushmanwakefield.com.