Office demand continued to improve on a q-o-q basis in Q4 2020 but net absorption remained subdued at 8.8 million sq. ft. Occupiers are still cost cautious but fewer downsizing relocations are being observed. The decline in regional Grade A rents decelerated to 1.2% q-o-q, bringing the full-year decline to 4.9% y-o-y.
Retail sales improved this quarter but a resurgence in COVID-19 infections in Japan and Korea cast a shadow over the recovery. Some retailers have put in place plans to expand this year, but the overall mood remains conservative. Most markets expect rents to decline further over the next 12 months, albeit at a slower pace than in 2020.
Global manufacturing PMI remained in expansionary territory in December 2020, reaching 53.8 on the back of a continued recovery in industrial activity. E-commerce and 3PL demand remained solid, with occupiers seeking strategically-located facilities as forward deployment to cater to short to medium term expansion. Most markets reported rental growth during the quarter.
Asia Pacific commercial real estate transaction volume totalled US$104 billion in 2020, a decline of 20% y-o-y. However, investment activity continued to recover on a quarterly basis, rising 41% q-o-q in Q4 2020 to US$36 billion. Surging interest in logistics and data centres ensured these sectors registered strong growth in transaction volume in 2020.