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August 29, 2017

Home to more than half the world’s internet and social media users, with rapidly growing smart phone adoption and a start-up eco-system, Asia Pacific is a technology company’s dream. And, as more and more look to increase their footprint across the region, real estate requirements become a high priority.

Tech firms are now among the largest occupier categories in many markets and over the near-term we expect further growth in tech sector demand,” says JLL’s Christopher Clausen, adding that start-ups, in particular, have emerged as a new category of occupiers. “The growth in the number and size of startups across many Asia Pacific markets has been swift and the proportion of high-quality office and business park space occupied by tech firms has surprised many.”

Technological requirement
To fully cater to these tech firms, landlords and developers need to be aware of the specific requirements of tech occupiers, says Clausen.

“The importance of a high-quality and stable power supply to tech companies cannot be overstated,” he explains. “Many tech firms continue to store large volumes of data onsite meaning they are housing a large number of server racks within their office. The servers themselves require power as do the cooling systems they depend on.”

Most tech firms require large floor plates with good layouts to give flexibility in their stacking plans.

“Landlords trying to woo tech firms should construct and invest in buildings with well-designed floor plates. Floor plates that facilitate the flexible and efficient use of space can help landlords accommodate the growth needs of these firms,” adds Clausen.

Tech firms are renowned for being on a constant hunt for talent and, in order to attract and retain talent, transport links are essential; tech firms are increasingly opting for Grade A offices to position themselves more favourably to both investors and potential talent. “Occupying a high-quality office or business park space can help improve a company’s image,” says Clausen. “Occupants of high-quality buildings are perceived as more professional, competent and trustworthy.”

Overcoming hurdles ahead
But tech firms do not always experience a smooth trajectory of growth and Clausen points to rising labour costs, a shortage of talent and a skills gap as issues that tech companies in the region are grappling with.

Other obstacles include a lack of land and infrastructure. “Some markets are facing a scarcity of land for future commercial development while others are facing a shortage of high-quality office stock. In both cases, room for expansion is held back,” he adds.

Government support and pro-tech policies will go a long way in driving the momentum of the tech sector. For example, Chengdu’s Hi-Tech Zone will provide a warchest of US$730million to attract and recruit global talent while boosting its scientific and technological innovation system by another US$1.46 billion.

“Despite these obstacles, the big picture remains that tech firms will continue to grow fast in Asia Pacific given the demographics and the level of smart phone adoption,” says Clausen. “The tech sector is set to continue driving office demand and landlords who want to tap into tech demand need to pay attention to where these firms are going and what they want from their buildings.

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Chris Clausen

Research, JLL Asia Pacific

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