27 Oct 2017
Beijing Prime Office Market Report Q3 2017
In the third quarter (Q3) of 2017, the vacancy rate in Beijing’s Grade-A office market slightly rose by 0.2 percentage point quarter on quarter (Q-o-Q), while the average rent increased by 0.8% Q-o-Q. In the quarter, domestic corporations remained the key driving force in the leasing market, while tenants from the finance, Internet, high-tech, law and automobile sectors were involved in major transactions. Three important en-bloc office investment transactions were concluded in Q3.
In Q3 2017, new supply lifted the overall vacancy rate in Beijing’s Grade-A office by 0.2 percentage point Q-o-Q to 7.3%. Driven by stable demand, the rent averaged at RMB374 per sqm per month, up by 0.8% Q-o-Q (see Table 1). Hengyi Tower in Asian-Olympic Area was officially launched in Q3, bringing 75,000 sqm of Grade-A office space to the market (see Table 1). Four office projects, located in Asian-Olympic Area, Wangjing and Lize FBD submarkets respectively, are expected to be completed in Q4.
Investors were highly interested in Beijing’s office properties. Three en-bloc office investment transactions were concluded in the quarter. Ample Grade-A office supply from core area of CBD and Lize FBD is expected to be launched since 2018 and the average vacancy rate in the capital city is estimated to rise mildly in the short to medium term. As a result, landlords will face greater competition in the future. Some landlords are expected to adjust their leasing strategy and become more flexible in negotiations to retain current tenants or attract potential tenants
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