2023-07-10-莱坊-Beijing_Office_Market_Report_Q2_2023_6页_1mb

Beijing Grade-A Office Market Q2 2023 Summary

Overview and Outlook

• Leasing Trends: Reduced leasing demand as companies prioritize cost savings and efficiency. Some firms use lease reductions to save costs.
• Market Indicators:
  • New supply unchanged at 12.31 million sqm.
  • Average rent fell 1.4% QoQ to RMB315.8/sqm/month.
  • Vacancy rate increased 0.1pp to 15%.
• Q3 Outlook: New supply expected to add 96,000 sqm with North Star Centre development completion.

Supply and Demand

• Leasing Activity: Weak new leasing demand due to industry consolidation (especially TMT and financial sectors).
• Sector Dominance: TMT led leasing transactions (37%), followed by financial services (20%) and professional services (70%).
• Regional Focus: TMT sector remains primary development focus.

Rent Trends

• Declining Rents: Rents continued downward trend (Q2 average RMB315.8/sqm/month).
• Submarket Differences:
  • CBD and East 2nd Ring Road experienced smallest rent changes.
  • Wangjing-Jiuxianqiao saw the largest rent decline (6.7% QoQ).
• Landlord Strategies: Lower rental expectations due to slow absorption and vacancy concerns.

Investment Market

• Activity: Domestic buyers active, especially in non-core areas; self-occupied purchases favored.
• Transactions:
  • Shunxin Jia Yu plans to purchase office in Shunyi Park (8,905 sqm, RMB38,000/sqm).
  • TINAVI acquired floors in Luftansa Tower.

Regional Analysis

• Inventory & Price Trends:
  • Top submarkets: CBD (3,400,000 sqm) and Lize (emerging, low rent RMB194/sqm).
  • Wangjing-Jiuxianqiao has low inventory but is losing ground to Lize and technological shifts.

Summary: In Q2 2023, Beijing's Grade-A office market saw declining demand, falling rents, and increasing vacancy, driven by corporate cost-cutting and industry consolidation. Supply growth is expected in Q3. Investment activity saw domestic self-occupied purchases focus on non-core areas and emerging zones.