28 July 2017
Beijing Prime Office Market Report Q2 2017
In the second quarter (Q2) of 2017, the vacancy rate in Beijing’s Grade-A office market dipped by 0.2 percentage point quarter on quarter (Q-o-Q), while the average rent edged up by 0.3% Q-o-Q. In the quarter, domestic enterprises from the finance, Internet and high-tech sectors remained the main drivers for leasing demand. In the quarter, the average sales price of Grade-A office properties decreased by 1.4% Q-o-Q. Two major en-bloc office investment transactions were concluded in Q2.
In Q2 2017, driven by the new supply in prime submarkets, the vacancy rate in Beijing’s Grade-A office rose by 0.2 percentage point Q-o-Q to 7.1%. Attributable to the high quality of the new supply, the overall rent increased by 0.3% Q-o-Q, averaging RMB371 per sqm per month (see Table 1).
Two Grade-A office buildings, namely CWTC Phase III B (62,000 sqm) in the CBD and CSCEC Fortune International Center (54,000 sqm) in Asian-Olympic Area, were launched in Q2 and provided 116,000 sqm of new office space (see Table 1).
Heng Yi Plaza in Asian-Olympic Area is expected to be launched in Q3, bringing 77,400 sqm of prime office space to the market.
In Q2, the average sales price of Grade-A offices dropped by 1.4% Q-o-Q to RMB52,303 per sqm (see Table 1).
Rentals remained high in quality projects with high occupancy rates in prime locations. On the contrary, existing projects with lower quality had to offer more rental incentives or discounts to retain tenants.
Ample Grade-A office supply in the second half of 2017 is expected to lift the average vacancy rate in the short term.
To view the full article, please go to page top to download the PDF version.