What’s Driving APAC Office Sector Demand?
Cushman & Wakefield recently published Tide Is Turning: Re-Evaluating APAC Office Investments report identifies the key growth drivers of office sector demand in Asia Pacific, highlighting strong office employment growth — with an estimated 14 million new office jobs to be added by the end of the decade, coupled with higher levels of in-office attendance in the region. The strong growth in the office sector has been witnessed through the last five years, despite the pandemic-induced industry disruption. Of the 40 cities we track in Asia Pacific, 39 have witnessed positive growth in the occupied Grade A space since Q4 2019.
What’s more, findings from our global occupier survey, conducted in partnership with Corenet, show that APAC has experienced rapid growth in technology-sector talent demand in the recent period. Of the survey respondents based in APAC, 77% stated they are looking to expand technology talent recruitment in their overall hiring plans, including 23% declaring an intended increase of more than 25%, much higher than counterparts in the Americas and EMEA regions.
Analyzing Growth Markets vs. Mature Markets
Cushman & Wakefield has further investigated specific demand drivers in each major APAC region market, especially in the growth markets comprising China, India, and Southeast Asia. As the Chinese economy pivots toward higher-quality industry development, real estate demand is increasingly being shaped by strategic emerging industries, such as biomanufacturing, AI, quantum computing, life sciences External Link, green technology, and cultural industries. These new entrants are not merely seeking office space, but also demand digital-first experiences, real-time services, and sustainable, future-ready design. Baseline requirements for such occupiers now include 5G, AI, IoT, and data-driven building management.
In India, more than 90% of office sector demand is concentrated around the top six urban areas, comprising Bengaluru, Mumbai, Delhi-NCR, Hyderabad, Chennai, and Pune. These cities have emerged as gateway destinations for global multinationals to station their Global Capability Centers (GCCs). In these major locations, occupancy profiles vary significantly among different grades of office building, with the highest-quality buildings commanding the highest tenant demand level and rental growth upside. Vacancy rates in the prime submarkets of Mumbai, Gurgaon (NCR), and Bengaluru have now fallen below the 5% level.
Technology sector occupiers are also active in Southeast Asia markets, aiming to tap into the region's vast populations and rapidly expanding digital economies. Ho Chi Minh City and Jakarta have become key city markets demonstrating prominent technology sector demand, driving more than a quarter of office demand in their CBD areas.
In mature markets, office vacancy rates in Tokyo and Seoul remain extremely tight, at 1.3% and 4.1%, respectively. In Tokyo, newly completed buildings have reached pre-commitment rates of close to 90%, signaling strong demand for quality office space. Rising relocation costs are also prompting existing tenants to secure additional space within the same buildings. As a result, the Tokyo Central 5 Wards (C5W) Grade A office market recorded achievable rent growth of 6.7% y-o-y in Q2 2025, and we expect the C5W Grade A office vacancy rate to remain below 2% in the short term, continuing to exert upward pressure on rental levels. In Seoul, demand from tech companies has remained strong, driving up rental growth. As a result, average office rentals in Seoul also rose 6.7% y-o-y in Q2 2025.
In Australia, although the overall office vacancy rate in Sydney climbed to 13% in Q2 due to new completions, net effective rents in the CBD area saw steady growth, with premium grade assets experiencing the highest rental growth of 8.8% y-o-y, driven by the “flight to quality and centrality.” We are observing similar trends in Melbourne. In Brisbane, lower vacancy rates are driving up rental growth, especially in the CBD, which recorded considerable y-o-y growth of 15.3% in net effective rents in Q2. Ahead, we expect Brisbane’s CBD office market to remain in a rental upswing as occupiers compete for limited high-quality assets.
Office Investment Strategies
Accordingly, we’ve identified a few key investment recommendations in Tide Is Turning: Re-Evaluating APAC Office Investments:
- Buy the next best thing. Occupier demand for high-quality trophy space remains strong. As this space fills up, look for demand to trickle down to the next best thing: Grade A space that is well located and is “newish” could emerge as one of the better opportunities in all CRE over the next few years.
- Repurpose/reposition well-located older office product. Owners that make a leap of faith, spend the money upgrade these buildings, are likely to be rewarded down the road.
- Lean into the uncertainty. Despite all of the volatility related to tariffs, the consensus still expects Asia Pacific to grow at healthy rate. Perhaps tariff-related-fears will create discounts that wouldn’t otherwise be there.
- A strong US dollar has cross-border capital accelerating into the Asia Pacific region. Consider monetizing core assets to hungry foreign capital and redeploying elsewhere to earn higher returns.
Reports mentioned (with inserted links):
Thematic reports:
- Tide is Turning – APAC Office Investment
- What Occupiers Want 2025
- APAC Office Demand Q2 2025
- Life Sciences on the Chinese Mainland
MarketBeats:
