BEIJING Map of <strong>Beijing</strong> <strong>Office</strong> Sub-markets OFFICE MARKET 2018 8
BEIJING MARKET INDICATORS 280,000 sq.m. office space absorbed in H1 2018; new supply to the tune of 255,000 sq.m. <strong>Beijing</strong> currently houses Grade A office space stock of approximately 7 million sq.m. Strong leasing demand was observed in 2018 and Grade A office absorption was recorded at around 280,000 sq.m during the first half of 2018 (January-June), while the total supply for the period amounted to 255,000 sq.m. Amongst the key office sub-markets, AGV & Olympic Park and Wangjing accounted for a whopping majority of the city’s total absorption in Q2 2018, though the CBD saw a number of large leasing transactions as well. The IT and finance sectors continued to remain dynamic and several remarkable transactions were inked during the quarter. Stricter regulations on the financial sector have slowed expansion amongst companies in traditional banking, insurance and securities sectors. Thus, the majority of leasing demand from the financial industry stemmed from funds and investment companies. Additionally, sectors such as professional services, real estate, and pharmaceuticals accounted for several significant transactions, too. Significantly, the occupier profile in the CBD has been observed to have been shifting in recent years. While the finance sector continued its stronghold in the market, there has been a marked decline in office occupiers from the IT sector. In contrast, there has been considerable increase in tenants from professional services sector in the region. Another key trend observed in the office market of <strong>Beijing</strong> has been the strengthening of co-working spaces. As a result, developers have been entering the co-working arena through partnerships and by creating their own brands. In Q2 2018, the average rent of <strong>Beijing</strong>’s Grade A office market increased slightly to RMB 382/sq.m. per month, depicting an increase of 1% quarter-on-quarter. This is primarily due to the active market performance observed during the period, with landlords in certain submarkets raising their rents. Meanwhile, on the vacancy front, the demand having outstripped supply in Q2 2018, the average vacancy rate saw a marginal decline on a quarterly basis and was recorded at 5% in Grade A office markets. The occupier profile in the CBD has been observed to have been shifting in recent years. While the finance sector continued its stronghold in the market, there has been a marked decline in office occupiers from the IT sector. OFFICE MARKET 2018 9
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