CONTACT US
Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting cushmanwakefield.com to read:%0A%0A {0} %0A%0A {1}

New Completions to Continue to Feature in 2024 — Greater China Top Office Supply Demand Trends

Mandy Qian • 28/03/2024
Cushman & Wakefield today released its annual Greater China Top Office Supply/Demand Trends report. According to the report, by the end of Q4 2023, the total Grade A office inventory in the core markets of the 21 major cities in Greater China the firm tracks totaled 68.2 million sq m. In the meantime, total premium core city office net absorption across the Greater China market for the whole year was 1.6 million sq m, an increase compared to the figure registered in 2022. 
 
Among the six major cities in the region, Taipei registered the lowest vacancy rate, at 8.3%. As for the tier-2 city group, Suzhou recorded the lowest vacancy rate at 16.5% among our tracked city markets in Greater China. 
 
Shaun Brodie, Head of Research Content, Greater China, Cushman & Wakefield, said, “2023 was the first full ‘normal operating’ year after the pandemic. However, during the year, the Grade A office market in Greater China faced a number of new challenges. Given the slow pace of economic recovery, office leasing demand was relatively weak throughout 2023 and did not see a rapid rebound." 
 
Jonathan Wei, President, Head of Project and Occupier Services, China, Cushman & Wakefield, said, “In the next two years, there will be a peak in supply in most of the major cities in the Chinese mainland region. This supply volume will inevitably lead to an increase in office project space availability pressure and a steady downward adjustment in rents. Landlords will need to continue to strengthen their market competitiveness to attract tenants.”
 
Beijing
 
In 2023, Beijing's Grade A office new supply increased by 43.2% y-o-y to 606,794 sq m. New supply in the five core submarkets and the suburban submarkets accounted for 30.2% and 69.8% of the total, respectively. 
 
In 2023, citywide annual net absorption recorded 147,985 sq m, down by 14.5% year-on-year (y-o-y). New supply combined with weak demand drove the city’s  vacancy rate up by 2.7 percentage points y-o-y to 18.7%. The citywide average rental level retreated 7.3% y-o-y to RMB297.9 per sq m per month. The TMT, finance, and professional services sectors continued to dominate leasing demand, with lease renewals becoming the primary option for tenants upon lease expiry. 
 
Ahead, approximately 1.08 million sq m of new supply is now expected to enter the market by the end of 2026, of which 40% will be launched in 2024. The large volume of new supply this year will drive up the city's vacancy rate and the average rental level is expected to be adjusted downward. In 2024, Beijing's development will focus on the digital economy and the expansion and opening up of the service sector. Accordingly, companies in the digital economy, the telecoms sector, the healthcare services sector and the financial services sector are set to be the main sources for office leasing demand in the city. 
 
Shanghai
 
In 2023, the Shanghai Grade A office market added nearly 1.6 million sq m of space, pushing the stock total to exceed 16 million sq m by Q4. 
 
Last year, the total net absorption of Grade A office space in Shanghai was 388,370 sq m. Among the new-deal occupiers, financial, professional services, and TMT tenants accounted for 19.8%, 16.1% and 16.0% of the total leasing transaction volume by area, respectively. By the end of Q4, the vacancy rate in Shanghai was 21.8% while the rental level was RMB239.5 per sq m per month. 
 
The next few years will still continue to see new supply complete. In 2024 alone, more than 1 million sq m of space is expected to enter the market, of which more than 60% of the GFA will be distributed in the suburban areas. 
 
In terms of demand, the expected large number of new high-quality projects will provide more choice for tenants but at the same time increase market competition among landlords. Against the background of oversupply, the office market in Shanghai in 2024 is expected to continue to be tenant-favorable. As for industry sectors, we expect demand for quality leased office space in the city in 2024 to continue to be driven by the finance, professional services and TMT industries. 
 
Shenzhen
 
Full-year new Grade A office supply of 845,530 sq m pushed the city’s stock past the 8 million sq m mark. New completions in 2023 were mainly located in the city’s western submarkets, with Nanshan, Qianhai and Bao’an Centre making up a 74.8% combined share of total new supply. 
 
Most companies remained cautious when considering expansion given the economic recovery positioning and weakening leasing demand. Having said this, supported by space upgrading and relocation demand, net absorption for the city in 2023 reached 392,600 sq m, surpassing the average total for the past 10 years. Meanwhile, the supply influx buoyed up the city-wide vacancy rate to 26.1% and pushed the average monthly rental for Shenzhen down to RMB186.5 per sq m. 
 
More than 1.4 million sq m of office space is projected to enter the Shenzhen market in 2024. Ahead, accumulating economic positives may provide a lift to the office market. Nonetheless, extra supply and softer-than-usual demand is expected to increase the vacancy rate and place downward pressure on rents. 
 
Guangzhou
 
In 2023, new supply in Guangzhou's Grade A office market continued the active project completion trend seen during the past two years, with six new projects entering the market throughout the year. These new completions brought a total of 461,000 sq m of new supply to the city, an increase of 10.5% y-o-y. On the submarket level, Pazhou was the area with the largest amount of new supply last year, accounting for 57.4% of total supply. 
 
In 2023, Guangzhou recorded a net absorption total of 90,510 sq m, a significant increase y-o-y. Domestic enterprises remained the mainstay for demand. Among them, professional services, retail & trade, and finance reached the top three in terms of the proportion of leased area take up for the year. Meanwhile, the city's year-end vacancy rate reached 18.7%, up 4.7 percentage points y-o-y. 
 
By 2027, the city's Grade A office market will welcome 3.33 million sq m of new supply, mainly in Financial Town and Pazhou. The continued volume of completed supply is expected to pull the net absorption back up but will also shape the city's vacancy rate to remain high for some time to come. Rents in the city, accordingly, are expected to remain under pressure with tenants continuing to remain in a strong leasing contract bargaining position into the rest of 2024. 
 
Hong Kong
 
In 2023, the total supply amounted to 114,900 sq m, down 57% y-o-y from the 266,500 sq m total recorded in 2022. All supply in 2023 was concentrated in suburban locations, with two projects located in Kowloon East and one in Kowloon West. We expect the upcoming supply to increase to 161,800 sq m in 2024.
 
Amid prevailing global economic uncertainty, business sentiment in Hong Kong remains cautious. The majority of office occupiers continue to prioritise cost-saving strategies. In 2023 full-year net absorption recorded -24,000 sq m, resulting in an availability rate that reached 18.8%* by the end of 2023. 
 
Hong Kong’s office sector is expected to encounter headwinds in 2024, with the high availability of office space exerting downward pressure on rents over the next 12 months. Grade A office rents are projected to further correct by -7% to -9% in 2024. On a brighter note, the introduction of new office supply offers occupiers additional options for flight-to-quality choices. This is particularly relevant for corporations seeking office premises that align with their Environmental, Social, and Governance (ESG) requirements within their tenancy agreements.
 
(*In addition to the new supply completion, the existing office building HSBC Centre Tower 1 was added to the building basket in Q4)
 
Taipei
 
In 2023, Taipei saw only one new Grade A office building complete – Fubon A25. This project added approximately 96,200 sq m of supply to the market – triple the figure seen in 2022. By the fourth quarter, the city's rental level was NT$819.8 per sq m per month, with the vacancy rate touching 6.1%.
 
In 2023, Taipei's net absorption was about 32,900 sq m. Demand mainly derived from financial and insurance sector company headquarters integration. Excluding their impact, net absorption was negative. Meanwhile, multinational corporation demand dropped from 81.4% in 2022 to 51.6% in 2023, mainly due to the uncertain international situation.
 
From 2024 to 2026, Taipei's Grade A office market will add about 640,000 sq m of space. Labor and material shortages have delayed new construction, but as stability returns, tenants will have more options, therefore reducing landlords’ advantages. In the meantime, the pandemic spurred new economic models and digital shifts. Office workers today are now seeking a better work-life balance. Understanding this, companies in Taipei must prioritize people-centric approaches and create friendly office environments to meet this need.
 
Please click here to download the full report
 
About Cushman & Wakefield
Cushman & Wakefield is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In Greater China, a network of 23 offices serves local markets across the region. In 2023, the firm reported revenue of $9.5 billion across its core services of valuation, consulting, project & development services, capital markets, project & occupier services, industrial & logistics, retail and others. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity and Inclusion (DEI), sustainability and more. For additional information, visit www.cushmanwakefield.com.

RELATED NEWS

Asia Pacific Office Fit Out Cost Guide 2024
Office Fit Out Costs Continue to Rise Across Asia Pacific, Albeit at a Much Slower Rate

Average office fit out costs across Asia Pacific continue to rise in 2024, albeit at a much slower rate as compared to a year ago, according to Cushman & Wakefield’s Asia Pacific Office Fit Out Cost Guide 2024. While inflation has started to ease in some markets, concerns about the interest rate environment, supply chain issues and geo-political tensions remain prevalent although there is hope for an economic rebound in the second half of 2024
 

Mandy Qian • 30/05/2024

China Social Value Report 2024
Social Value — Bringing Worth to Commercial Real Estate in Greater China

The S in ESG relates to social, and it refers to an organization's ability to satisfy the needs of its stakeholders, and ensuring that social justice, equity, and fundamental human rights are sustained. When considering commercial real estate, social value is when value is produced when commercial buildings and places improve the quality of life of people.
 

Mandy Qian • 22/04/2024

Standard Chartered Bank Appointment 2024
Cushman & Wakefield Appointed by Standard Chartered Bank to Deliver Property Services Across Asia and Global Asset and Transaction Management

Cushman & Wakefield has been appointed by Standard Chartered Bank (the Bank) to provide services to support its Asia workplace transformation, and Global Asset and Transaction Management for the Bank’s 11 million sq ft global real estate portfolio.
 

Mandy Qian • 18/04/2024

China Battery Energy Storage System Report 2024
The China Battery Energy Storage System (BESS) Market — New Energy for a New Era

A Battery Energy Storage System (BESS) secures electrical energy from renewable and non-renewable sources and collects and saves it in rechargeable batteries for use at a later date. This report explores how China's renewable energy push over the last few years has stirred the country's domestic energy storage market.
 

Mandy Qian • 11/04/2024

Hong Kong Office Retail Residential Market Report Q1 2024
Hong Kong Government’s Removal of All Property Cooling Measures Supported Residential Sales Rebound and Price Recovery in March

Following the Hong Kong Government's lifting of all demand-side management measures for residential properties, the market responded positively, with primary and secondary residential transactions strengthening and home prices picking up from March onwards. Office sector overall net absorption in Q1 remained positive. Visitor spending continued to support a recovery in the retail market.
 

Rosanna Tang • 10/04/2024

China Top Office Supply and Demand Trends Report 2024
New Completions to Continue to Feature in 2024 — Greater China Top Office Supply Demand Trends

Total Grade A office inventory in the core markets of the 21 major Greater China cities tracked in the Greater China Top Office Supply Demand Trends report totaled 68.2 million sq m at the end of Q4 2023. Total premium core city office net absorption across the Greater China market for the whole year was 1.6 million sq m, an increase on the figure registered in 2022.
 

Mandy Qian • 28/03/2024

MSCI RCA Data Ranking China Full Year 2023
Cushman & Wakefield Ranked No. 1 Real Estate Investment Brokerage Firm in Mainland China for 2023 by MSCI

MSCI have ranked Cushman & Wakefield as the No. 1 real estate investment brokerage firm in mainland China in their Global Broker Rankings 2023 report. According to MSCI, Cushman & Wakefield represented 49% of all-sector real asset investment brokerage transactions in mainland China in 2023. In addition, the firm represented 75% and 72% of investment brokerage transactions for office and retail properties in mainland China, respectively.
 

Mandy Qian • 12/03/2024

China Data Centers Report 2024
Data Centers in Greater China — Three Points to Process in 2024

As investors, developers and operators continue to involve themselves in the data center market in the region, there are many themes, topics, and issues to consider. This report looks at three key points to consider for the overall data center market in Greater China: the market, government policy, and asset management.
 

Mandy Qian • 29/02/2024

Hong Kong GBA Market Report Year End 2023
Investment Sentiment in Greater Bay Area Picked Up in 2H 2023 as Housing Control Measures Gradually Relaxed

Although the GBA’s residential and investment markets were yet to see a significant rebound following China’s full border reopening, housing market sentiment stabilized in 2H 2023 as China’s central and local governments gradually relaxed residential market control measures. The CRE investment market (large-sized deals at >RMB 100 million) also saw mainland capital and state-owned enterprises more active in reviewing their strategies and seeking investment opportunities.
 

Rosanna Tang • 18/01/2024

With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on Privacy & Cookies.
MORE OPTIONS
AGREE AND CLOSE
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All
SAVE SETTINGS