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Beijing Market buoyant for 2012 from Commercial Design Trends volume 2804
The Beijing Grade A office market remained strong throughout 2011, despite uncertainties and turbulent external factors impacting domestic business growth. The latest market report from Jones Lang LaSalle says 2011 was a record year, with rents rising by 41% year on year.
Accumulated new supply in 2011 reached approximately 8 million sq ft, almost the same level as that of 2010. However, new supply from lease-only projects was less plentiful, and in the case of Finance Street there was no new supply at all.
Eleven Grade A office projects were completed in 2011 – four projects were for self-use, accounting for 42% of the new supply. As such, total Grade A stock increased to approximately 66.7m sq ft.
Total net absorption hit 9.3m sq ft. From the first to the third quarters of 2011, healthy momentum in the growth of demand for office space continued. In the fourth quarter, although global financial market turbulence and the European sovereign debt crisis cut the world's economic growth forecasts, the Beijing office market still experienced increasing demand, albeit with a slightly lower growth rate than in previous periods. Some hotspot sub-markets, such as Finance Street, have clients waiting for any surrendered space.
In addition to demand for self-use buildings, mostly from domestic companies, leasing demand continued to be driven by financial services companies, consulting firms, law offices, and high-tech and manufacturing companies.
Even with 8.1m sq ft entering the market, overall vacancy rates continued to drop and remained at an all-time low on the back of the strong demand from both self-use owners and tenants. As of the end of 2011, the vacancy rate reached 9.1%. In various sub-markets most vacancy rates dipped below 10%, while Finance Street, East Second Ring Road and Zhongguancun saw vacancy rates even lower, within the range of 0–5%.
Seven projects are expected to be completed in 2012 offering a total GFA of approximately 4.5m sq ft. Leasing-only projects will account for half of the new supply, while the remaining space is reserved for self-use owners. Despite reduced economic growth forecasts and record high rents, overall demand in the Beijing office market is expected to experience stable growth in 2012 with net take-up over 4.3m sq ft. The overall vacancy rate is likely to remain low, at around 9%, while rent is projected to grow at a lower pace than 2011.
For more details, contact Jones Lang LaSalle Beijing. Tel: (86) 10 5922 1300. Or visit the website: www.joneslanglasalle.com.cn