A view of skyscrapers in Beijing’s CBD district on May 18. (Photo / China Daily)
The Beijing office market vacancy rate will decline in the fourth quarter and rents are expected to rebound in the last quarter or first quarter of 2022, industry experts have said.
The annual net absorption volume is expected to peak in 10 years, and the vacancy rate of 19.4% in the fourth quarter of last year could become a step high in the next four to five years, a declared Colliers International, an international real estate agency.
Based on its analysis, the Class A office market in Beijing reached stability in the third quarter and market demand returned to normal. Although demand slowed this quarter, it remained at a high level, reaching rental transactions of 215,000 square meters. Excluding the effect of the personal use area, the net absorption volume remained at 171,000 square meters.
Benefiting from strong market demand, the vacancy rate fell further to 16.7%, down 1.4% from the previous quarter. The market rent was 341.1 yuan ($ 52.73) per square meter per month, a slight increase of 0.1% from the previous quarter, this is the first time that the rent has stabilized after have declined for nine consecutive quarters.
Some mature industrial parks have been strongly impacted by the policy of “reducing homework and extracurricular training” in the short term, but demand is still strong. According to data from Colliers International, the net absorption volume of the industrial park market declined during this quarter to 126,000 square meters, and the vacancy rate fell further to 16.9%. Although online education companies signed leases after the introduction of this policy, its impact on the overall market is very limited. As online education businesses are located in low vacancy rate markets, such as Jiuxianqiao and Shangdi, a large-scale outlet provides more space for other businesses. Also, since the desks left by online education companies have brand new decor and furnishings, they are very popular among internet companies after they come to market. With the exception of a few educational buildings, owners are generally optimistic and do not care too much about subsequent rentals.
In the fourth quarter, 141,000 square meters of new supply will enter the Class A office market. Lu Ming, director of Colliers’ international research department, said that although the net absorption volume has gradually returned to normal , due to the limited number of new projects and the high proportion of personal use area, the office market will continue to expand in the fourth quarter.
But the mismatch between demand and supply is still serious in the Beijing office market. There is a geographic mismatch between the demand for large-scale office space and inactive office space. The new demand is concentrated in the Zhongguancun, Shangdi and Wangjing areas, while the available industrial office is mainly located in the CBD and Lize areas, the most popular areas for rental at present. From the point of view of sales in the market in the first three quarters, the proportion of CBD in the net absorption of the market increased from 23% in the first quarter to 34% in the second quarter, even reaching 69% in the third quarter.