cushman & wakefield releases a new research report on the top office supply and demand trends in greater china
jan 16, 2020
space opportunities abound for occupiers after a year of uncertainty
shanghai, january 16, 2020 – cushman & wakefield (nyse: cwk), a leading global real estate services firm, published a new research report today, titled greater china top office supply/demand trends 2019. this report provides a snapshot understanding of the general grade a office market demand conditions in greater china over the past year (october 2018 to september 2019) and into the near future.
during the year, the grade a office market in greater china has been subjected to both macro uncertainty, which has clouded the business outlook for many occupiers, as well as excessive supply in several cities. on the back of this, vacancy has risen and as it has done so, so the opportunities for occupiers to lease space on favorable terms in the region have increased as well.
in the coming years, the grade a office market in a number of greater china cities is expected to see a surge of supply. on the demand side, we do see some macro positives beginning to work themselves into the market to help drive office space demand. these include mainland china’s economic shift to higher value-add industries, the partial trade deal reached by china and the u.s., and the implementation of large-scale regional development plans, such as the yangtze river delta (yrd) integration plan and the greater bay area (gba) development plan.
source： cushman & wakefield research
in the near term, the office supply/demand trend in major cities across greater china is as follows:
beijing: the tmt, professional services and finance sectors will continue to lead demand for grade a office space in the city. however, in the short term, the volume of new supply in beijing’s suburban areas and the slowing economy will both be influential regarding the demand trend and rental projections for the coming year.
shanghai: excessive supply of grade a office space in the city is likely to create further competition among landlords. heightened vacancy is expected to exert further pressure on citywide rental. however, this situation will be more appealing to tenants who are enjoying business expansion as they look to lock in attractive rental rates on longer-term leases.
guangzhou: as one of the key cities in the gba, guangzhou is likely to see more demand from the professional services and financial sectors. meanwhile, guangzhou is enjoying rapid business expansion in its high-tech industry, and tmt sector business growth is expected to generate further demand for quality office space in guangzhou in the future.
shenzhen: amid the global and domestic economic downturn, demand for grade a office space has softened. subsequently, the average rental for the city is forecasted to dip, which will benefit occupiers who are looking for quality space at a lower rental.
wuhan: in the short term, the extent of planned future supply in wuhan is expected to generate further competition among landlords as vacancy expands. however, with business growth potential, investment promotion policies and the further opening-up of the central china marketplace, this situation could ease in the mid- to longer-term as more corporations move to or expand their operations in wuhan in the future.
chengdu: the supply wave ahead is likely to increase the vacancy rate and apply downward pressure on rent in the short term. however, as the chengdu government has continued to attract companies with favorable business policies, we expect this continuing strategy to buoy office take-up in the city going forward.
hong kong: office leasing demand is expected to continue to weaken over the next 12 months against market uncertainty and local unrest. limited new supply is forecast for completion in the next 12 months, with overall demand set to remain weak.
taipei: leasing activity is expected to decline in the short-term simply due to the lack of rentable space. consequently, grade a office leasing transactions in taipei will mainly be dominated by small-to-medium size leasing demand over the next several months.
as for general office occupier trends in the region, two of the three prevalent supply-side trends outlined in the report are ‘smart’ office buildings and space and ‘green’ office buildings and space:
vicky shen, head of office agency, china, cushman & wakefield, commented: “truly smart office buildings are only just coming to the fore in the region. many more will follow, and onwards this will lend itself to be a positive for the overall grade a office market in greater china.
meanwhile, green office buildings generally outperform non-green buildings in terms of property rentals and capital values.
“the business case for building green is strong and it would not be surprising for green office buildings to become more mainstream in greater china over the mid- to long-term,” said shaun brodie, head of occupier research, greater china, cushman & wakefield.
there are six demand-side trends highlighted in the report. one trend that will have a significant bearing on office take-up in china in the future is the growth of the tmt industry. artificial intelligence, (ai), fintech, smartphone technology, blockchain and 5g are just some of the many technologies that tmt companies in china are now advancing.
“along with the emergence of these technologies,” remarked jonathan wei, head of occupier services, china, cushman & wakefield, “we do expect related tmt sector business growth to translate into increased demand for quality office space across the country and certainly in the tech-centric city markets.”
click here to read the full report.
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about cushman & wakefield
cushman & wakefield (nyse: cwk) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. cushman & wakefield is among the largest real estate services firms with 51,000 employees in approximately 400 offices and 70 countries. across greater china, there are 22 offices servicing the local market. the company won four of the top awards in the euromoney survey 2017 and 2018 in the categories of overall, agency letting/sales, valuation and research in china. in 2018, the firm had revenue of $8.2 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. to learn more, visit www.cushmanwakefield.com or follow @cushwake on twitter.
for further information, please contact:
mandy qian
director, marketing & communications, greater china
tel: 86 10 8519 8040
mandy.qian@cushwake.com
