New Supply Peaked in Q4 With Over 520,000 SQM Grade-A Space Added
In the fourth quarter (Q4) of 2019, the uncertainty of economic environment led to continued weak market demand. Coupled with a large amount of new supply entering the market Beijing Grade-A office market faced huge pressure on absorption rate. Vacancy rate exceeded 12%.
In Q4, the average rent of Grade-A office buildings continues its downward trend, with a slight decrease of 0.4% QoQ to RMB 358.7 per sqm per month.
In 2019, the average rent of Grade-A office buildings in Beijing dropped by 5.8% YoY, which was the first negative growth in rent for five consecutive quarters in the past decade. The softening demand has brought huge pressure on absorption rate to the market. In Q4, the vacancy rate of Grade-A office buildings in Beijing exceeded 12%, and the office market was turning to a “tenant’s market”.
In Q4, four Grade-A office buildings were completed and delivered in Beijing, bringing
521,646 sqm of new space to the office market, pushing the vacancy rate up by 2 percentage points QoQ to 12.1%. In terms of leasing transactions, the leasing demand
in the office market is still dominated by the financial, Internet and high-tech sectors.