Across Asia-Pacific, corporate occupiers face an increasingly urgent question about their office footprint. For the past two years, lease renewals have dominated the market as organisations sought to avoid capital expenditure on relocation amid economic uncertainty. This pattern is now changing. 

Throughout 2025, companies opted for renewals over relocations to maintain short-term budgets. However, this approach leaves a mismatch between existing office stock and current business requirements.

The decision timeline is compressed by a significant supply constraint on the horizon. Regional office supply is projected to decline by over a third in 2027. This reduction will fundamentally alter market dynamics, accelerating rent growth and reducing tenant optionality. Organisations that defer relocation decisions until 2027 will face a materially different and less favourable leasing environment. 

2026 represents the final opportunity to secure advantageous terms before this supply contraction takes effect. 

The persistence of renewal strategies overlooks a more significant issue: most existing office portfolios were not designed for current operational requirements.

Organisations now face multiple concurrent imperatives. Artificial intelligence integration demands different workplace configurations. Sustainability commitments require ESG-compliant facilities with strong energy performance. Talent retention strategies rely on spaces that foster collaboration and support hybrid work models. These aren't incremental adjustments, rather they represent fundamental shifts in how space must function. 

India's Global Capability Centres exemplify this dynamic. These operations are achieving record leasing volumes in 2025, driven by expansionary moves into higher-specification buildings rather than renewals. Similarly, Hong Kong's recovering IPO market has generated increased demand from financial and legal firms relocating to spaces that better support their operations and client expectations. 

The evidence suggests that growth-oriented organisations are actively choosing to relocate rather than compromise on the quality of their space. 

Total cost of occupancy vs. immediate cash outlay

Standard cost analysis often overweighs initial relocation expenditure while undervaluing the ongoing costs of suboptimal space.

Organisations occupying buildings that don't align with their operational model incur several less visible costs: reduced productivity from inefficient layouts, higher energy consumption from outdated building systems, competitive disadvantage in talent markets, and potential compliance risk as building performance regulations tighten. 

The apparent savings from renewal may obscure higher total occupancy costs over the lease term. 

Converging factors make 2026 decisive

Several market conditions are aligning to create a distinct window for relocation decisions.

Financing conditions have stabilised. While fit-out costs remain elevated relative to historical norms, they are increasingly predictable, enabling more accurate project budgeting. Some landlords are offering substantial incentive packages to secure tenants in new developments before the 2027 supply contraction reduces their negotiating flexibility. 

Additionally, the workspace market is evolving beyond traditional structures. Managed office solutions are becoming viable options for larger corporate occupiers, offering flexibility without the operational complexity typically associated with conventional coworking spaces. The Work Project's recent joint venture agreements with CapitaLand and Dexus demonstrate how these models are scaling, providing tenants with adaptability while allowing asset owners to maintain oversight without direct operational involvement. 

This expansion of lease structures creates options that didn't exist in previous market cycles. 

Framework for decision-making

Organisations evaluating their office strategy should consider several factors:

Forward planning horizon: Assess space requirements against business trajectory over a 3–5-year period. If eventual relocation is inevitable, market timing becomes a significant factor. 

Total cost analysis: Compare relocation capital expenditure against the cumulative costs of remaining in suboptimal space, including energy inefficiency, productivity impacts, and talent acquisition challenges. 

Flexibility requirements: Geopolitical risks are driving increased demand for flexible workspace solutions that provide agility and scalability without long-term commitment. 

Supply timing: 2026 will still see substantial new supply, amounting to nearly 9.4 million square meters across the region, but this represents an 11% decrease from 2025 levels. With vacancies projected to rise modestly to 16-18% and rent growth remaining under 2%, the current year offers a more balanced negotiating environment than the tighter conditions expected post-2027. 

Regulatory trajectory: Assess current building performance against evolving ESG and energy efficiency regulations. Non-compliant buildings may face increased operating costs or be required to undergo expensive retrofits. 

Strategic positioning 

The most effective decisions extend beyond rent comparisons to evaluate whether real estate assets support or constrain organisational objectives. 

Leading organisations are reframing workplace strategy around competitive positioning. Office space is evaluated not merely as a cost centre but as infrastructure that enables performance, supports talent strategies, and reflects organizational priorities. 

For organisations in buildings that genuinely meet current and projected needs, renewal remains a suitable option. However, for those facing any misalignment between their space and their operational requirements, 2026 represents the last favourable window before market conditions deteriorate. 

The central question is not whether to stay or relocate, but whether the organisation can afford the opportunity cost of delay. As supply tightens and transformation pressures intensify, the cost of waiting may exceed the cost of moving. 

Organisations that treat this as a strategic inflection point rather than a routine lease decision will be better positioned for the market environment that follows.

Discover more insights in our 2026 Asia-Pacific outlook report here.