Jul 18, 2024 02:01 AM
ECONOMY
Surge in Demand for Shanghai’s Glitzy Office Space, But Rents Still Falling
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An office building in Lujiazui, the financial district in Shanghai.
Office space in Shanghai has seen a significant rise in demand in the second quarter of the year with more being leased, although rents are still falling. But with newly built offices coming on to the market, the vacancy rate might increase.
Shanghai’s net absorption volume — that’s the amount of space leased minus the amount vacated — rose to 263,000 square meters from 86,000 square meters in the first quarter, data from Cushman & Wakefield show.
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- Demand for Shanghai office space increased significantly in the second quarter, with net absorption reaching 263,000 sqm, compared to 86,000 sqm in Q1.
- Despite rising demand, rents are declining due to landlords cutting prices and a high vacancy rate of 21.7% for Grade A offices.
- A projected 951,000 sqm of new office space will enter the market in 2024, slightly below the decade's average of 1.03 million sqm annually.
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Who’s Who
- Jones Lang Lasalle
- Jones Lang Lasalle (JLL) is a prominent commercial real estate firm mentioned in the article. According to senior director Jiang Su from JLL's Shanghai commercial real estate department, companies are relocating from remote areas to core districts and from older to newer buildings, driven by cost savings. JLL also reported that rents for Grade A offices in Shanghai’s central business district fell by 4.6% quarter-on-quarter, and by 3.8% outside the center.
- Cushman & Wakefield
- Cushman & Wakefield provided key data in the article, showing that Shanghai’s net absorption volume of office space rose significantly in the second quarter of 2024. They noted the increase in absorption due to lower rents and office upgrades. Vacancy rates, however, remain high, with Grade A offices at 21.7%. Cushman & Wakefield also forecasted the addition of 951,000 square meters of new office space in 2024.
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What Happened When
- First quarter of 2024：
- Net absorption volume was 86,000 square meters.
- Second quarter of 2024：
- Net absorption volume rose to 263,000 square meters.
- Second quarter of 2024：
- Rents for Grade A offices in Shanghai’s central business district fell 4.6% quarter-on-quarter.
- Second quarter of 2024：
- Rents outside the center fell by 3.8% quarter-on-quarter.
- Second quarter of 2024：
- Vacancy rate for Grade A office space fell slightly by 0.3 percentage points to 21.7%.
- First half of 2024：
- Four Grade A office projects, amounting to 241,000 square meters, came on to the market.
- By the first six months of 2024：
- Net absorption reached 349,000 square meters.
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