Asia office net absorption stood at 11.0 million sq. ft. NFA in Q1 2020, a figure largely unchanged q-o-q. However, most leasing deals were completed prior to the COVID-19 outbreak and the introduction of lockdown measures. Large new supply combined with weak net absorption pushed up Asia office vacancy by 0.5 ppts q-o-q to 12.7%. Asia Pacific Grade A rents fell by 0.6% q-o-q.
Travel restrictions, country-wide lockdowns and the temporary closure of non-essential stores exerted a severe impact on the retail market this quarter. Leasing activity slowed as most retailers postponed expansions or delaying new openings. Rents fell by 2.4% q-o-q, the sharpest fall since the Global Financial Crisis in 2008.
Industrial sentiment weakened across the region amid significant supply chain disruption caused by the spread of COVID-19. However, overall warehousing demand remained firm, supported by resilient e-commerce demand and a surge in last-mile delivery requirements. Rents were unchanged.
Investors moved into move into wait-and-see mode in Q1 2020 as the spread of COVID-19 caused widespread disruption to investment decisions, site inspections and other phases of the deal process. Asia Pacific commercial real estate investment volume fell to US$22 billion, the lowest quarterly total in almost three years.