31 Oct 2016
SHANGHAI OFFICE MARKET REPORT Q3 2016
P2P COMPANY CLOSURE LEADS TO GRADE-A RENTAL DECREASE IN Q3
In the third quarter (Q3) of 2016, nearly 248,540 sqm of new Grade-A offices were launched in Shanghai (See Table 1)
In Q3, the average Grade-A office rent edged down by 2.0% quarter on quarter (Q-o-Q) to RMB9.8 per sqm per day, the first decline in the past 12 months (See Table 1).
Financial institutions and technology companies were active in the leasing market in Q3.
Co-working operations continued to flourish in Shanghai.
In Q4 2016, the closure of P2P companies is expected to continue reducing demand in the office leasing market. Another 400,000 sqm of new supply is anticipated to complete.
Century Grand Metropolis is scheduled for completion in Q4, adding approximately 120,000 sqm of new space to the market.
We expect the vacancy rate to go up P2 further. However, considering vigorous demand in Core CBDs and CBDs, rents will remain stable in Q4. In the next 12 months, we believe the negative impact of P2P company closure will gradually fade. Office rents are expected to rebound with an annual growth rate of approximately 3%.