Jun 28, 2024 04:13 AM
ECONOMY
Beijing Office Rents Plunge 30% in Five Years as Vacancy Rates Rise
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A vacant office building in Beijing.
Beijing’s office market suffered a challenging second quarter, with no new supply and dwindling rental demand causing a sharp decline in rents.
Office rents in China’s capital fell 3.9% from the first quarter to 279.2 yuan ($38.4) per square meter, the fastest quarterly decline in nearly four years, data from Cushman & Wakefield and Colliers International show.
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- Beijing's office rents fell by 3.9% to 279.2 yuan per square meter in the second quarter, experiencing the fastest quarterly decline in nearly four years.
- The vacancy rate stands at 18%, with increasing volume but decreasing prices making it a buyer's market.
- With 425,000 sq. meters of new office space expected, rents are predicted to continue falling, driven by weak demand and high vacancy rates.
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Who’s Who
- Cushman & Wakefield
- Cushman & Wakefield is a global real estate services firm involved in Beijing's office market analysis. Their data reveals that office rents in Beijing fell 3.9% in the second quarter, with landlords reducing rents and offering incentives like longer rent-free periods and free renovation to attract tenants. They also provided insights into upcoming new office space and predicted continued downward pressure on rents due to high vacancy rates.
- Colliers International
- Colliers International reported that office rents in Beijing have dropped sharply, falling 3.9% from the first quarter to 279.2 yuan per square meter. Lu Ming, head of North China research at Colliers, noted that weak demand and high vacancy rates are systemic issues that hinder market recovery. The company also highlighted that falling rents will narrow the rent gap between different sub-markets and asset classes, leading to intensified competition among landlords.
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What Happened When
- By the second quarter of 2019：
- Rents for grade A office buildings in Beijing were 396.19 yuan per square meter.
- End of 2019：
- Zhongguancun's vacancy rates were 1.2%.
- Second quarter of 2024：
- Beijing's office market saw no new supply and dwindling rental demand, causing a sharp decline in rents.
- Second quarter of 2024：
- Office rents in Beijing fell 3.9% from the first quarter of 2024 to 279.2 yuan per square meter.
- Second quarter of 2024：
- Net absorption of office space in Beijing was 45,000 square meters.
- Second quarter of 2024：
- Beijing's office vacancy rate declined quarter-on-quarter by 0.3 percentage points to 18%.
- Second quarter of 2024：
- Zhongguancun's vacancy rates rose to 12.6%.
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