2023-07-26-莱坊-Shenzhen_office_market_report_Q2_2023_6页_1mb

Shenzhen Grade-A Office Market Report Summary - Q2 2023

Core Content

This report provides an analysis of the Shenzhen Grade-A office market for Q2 2023, focusing on key indicators such as supply and demand, rent levels, vacancy rates, and investment trends. The market continues to face challenges due to over-supply, which has affected rental prices and vacancy rates. However, there are signs of gradual recovery and policy support that may help stabilize the market in the coming quarters.

Main Points

Leasing Demand

• Leasing demand showed a slow but positive recovery in Q2 2023.
• The vacancy rate increased by 1.6% QoQ to 21.8%.
• Average rents declined by 1.6% QoQ to 180.4 RMB/sqm/month.
• Law firms and financial companies were the primary drivers of leasing demand, with multiple transactions exceeding 10,000 sqm.

Investment Market

• Buyers in the investment market were mainly from the financial sector, indicating strong leasing demand from this group.
• Two en bloc transactions occurred in Q2, both in Futian District, totaling approximately RMB2.4 billion.
• CZBank and Baoxin Financial were notable buyers, with CZBank acquiring 41,186 sqm for RMB2.334 billion.
• These transactions suggest that financial institutions are actively purchasing office space for self-use, to prepare for future growth and mitigate rental risk.

Market Outlook

• Leasing demand is expected to regain momentum in Q3 2023, supported by cyclical and policy factors.
• However, new supply is anticipated to exceed 700,000 sqm in H2 2023, which may further increase vacancy rates and continue the downward trend in rents.
• Rents are projected to remain under pressure for the rest of 2023, but the rate of decline is expected to slow down as demand improves.

Key Market Indicators

Submarket Performance

Supply and Take-up

• New supply in Q2 was 150,000 sqm, including Block B of Shenzhen Science and Technology City and HFCC in Qianhai.
• Net take-up was approximately 50,000 sqm, a decrease of 40,000 sqm compared to previous quarters.
• The slow recovery of demand and longer negotiation cycles contributed to the rise in vacancy rates.

Major Leasing Transactions

• ZHONG LUN LAW FIRM leased 10,000 sqm in Ping An Finance Centre.
• ZHONG YIN LAW FIRM leased 6,000 sqm in Ping An Finance Centre.
• Linklogics leased 10,000 sqm in Qianhai Chow Tai Fook Financial Building.
• CENTURY SECURITIES leased 6,000 sqm in Qianhai HFCC.
• Texas Instruments leased 5,000 sqm in Qianhai Kerry Centre.

Key Figures and Trends

• Vacancy rate increased to 21.8% in Q2 2023.
• Average rent dropped to 180.4 RMB/sqm/month.
• New supply is expected to surpass 700,000 sqm in H2 2023.
• Rents are expected to remain under pressure, but the decline rate will likely slow down as demand recovers.

Contact Information

• Laurence Zhu
  Senior Director, Head of Research & Consultancy, China
  +86 21 6032 1769
  laurence.zhu@cn.knightfrank.com

• Regina Yang
  Director, Head of Research & Consultancy, Shanghai & Beijing
  +86 21 6032 1728
  regina.yang@cn.knightfrank.com

• Ken Kan
  Managing Director, Head of South China Office Services, Shenzhen
  +86 755 6661 3141
  ken.kan@cn.knightfrank.com

• Martin Wong
  Director, Head of Research & Consultancy, Greater China (Guangzhou)
  +852 2846 7184
  martin.wong@hk.knightfrank.com

• Stephen He
  Analyst, Research & Consultancy, Guangzhou
  +86 20 3877 1477
  stephen.he@cn.knightfrank.com

Additional Resources

• Recent market-leading research publications include reports on the Beijing Office Market, Shanghai Office Market, Guangzhou Office Market, and Greater Bay Area Development.
• The Asia-Pacific Outlook 2023 is also available for further insights.