A view of the skyscrapers in Beijing's CBD area on May 18. (Photo/China Daily)
The vacancy rate of Beijing's office market will drop in the fourth quarter, and the rent is expected to rebound in the last quarter or in the first quarter of 2022, industry experts said.
The annual net absorption volume is projected to reach a 10-year high, and the 19.4 percent vacancy rate in the fourth quarter last year may become a staged summit in the next four to five years, said Colliers International, an international real estate agency.
Based on its analysis, the Grade A office market in Beijing has achieved stability in the third quarter, and the market demand has returned to normal. Although the demand slowed down in this quarter, it remained at a high level, reaching rental transactions of 215,000 square meters. If the effect of self-use area is excluded, the net absorption volume stayed at 171,000 square meters.
Benefiting from the strong market demand, the vacancy rate further fell to 16.7 percent, 1.4 percentage drop from the previous quarter. The market rent was at 341.1 yuan ($52.73) per square meter per month, a slight growth of 0.1 percent from the previous quarter, which is the first time that the rent has stabilized after falling for nine consecutive quarters.
Some mature industrial parks have been greatly affected by the policy of "reduction of homework and after-school training" in the short term, but the demand is still strong. According to the data from Colliers International, the net absorption volume of the industrial park market declined in this quarter to 126,000 square meters, and the vacancy rate further dropped to 16.9 percent. Although online education enterprises signed leases after the introduction of this policy, its impact on the whole market is very limited. As online education enterprises are situated in markets with low vacancy rate, such as Jiuxianqiao and Shangdi, large-scale exit provides more space for other companies. Moreover, since offices left by online education enterprises have brand-new decoration and furniture, they are very popular among internet enterprises after being put into the market. Except for a few education buildings, the owners are generally optimistic and show no excessive concern about subsequent renting.
In the fourth quarter, 141,000 square meters of new supply will enter into Grade A office market. Lu Ming, director of Colliers International Research Department, said that although the net absorption volume gradually returned to normal, due to the limited number of new projects and the high proportion of area for self-use, the office market will continue to develop in the fourth quarter.
But the mismatch in demand and supply is still serious in Beijing office market. There is a geographical mismatch between large-scale office demand and idle office space. The new demand is concentrated in Zhongguancun, Shangdi and Wangjing areas, while the available industrial office is mainly located in CBD and Lize areas, the most popular areas for lease at present. From the perspective of market sale in the first three quarters, the proportion of CBD in the net market absorption has increased from 23 percent in the first quarter to 34 percent in the second quarter, even surging to 69 percent in the third quarter.