Office Snapshot Q1 2017
Beijing
MARKETBEAT
Economic Indicators
Grade A CBD Market Indicators
Grade A CBD Rent & Vacancy Rate
Supply Pipeline
cushmanwakefield
Q3 16Q4 16Past12-MonthGrowth
GDP Growth6.7%6.7%
Tertiary Sector Growth7.3%7.1%
CPI Growth 1.2%1.4%
Q4 16Q1 1712-Month Forecast
Average Effective
Rent* (RMB/sqm/mo)409.5410.5
Vacancy Rate5.0%5.5%
0%
2%
4%
6%
8%
200
220
240
260
280
300
320
340
360
380
400
420
Va
can
cy
Ra
te
(%
)
Re
nt
(RM
B/s
qm
/m
o)
Overall RentVacancy Rate (%)
Source: Beijing Statistics Bureau200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
20172018201920202021
Le
tta
ble
O
ffic
e A
rea
(‘0
00
sq
m)
Core SubmarketsEmerging SubmarketsCompletion
10 year (2007–2016)Historical Average = 647,000 sqm
BEIJING OFFICE
Economy
Beijing recorded GDP growth of 6.7% y-o-y in 2016, continuing a
smooth run over the entire year. Real estate investment in fixed
assets fell to 2.1% y-o-y growth in 2016, down from 8.1% in 2015.
MarketOverview
The market welcomed a number of new office buildings, such as
China World Trade Center Tower IIIB and ZhongguancunCapital
Tower. The properties added a combined 156,000 sqm of Grade
A office supply and raised stock to 9.46 million sqm.
Beijing’s Grade A office rents remained stable in Q1. The overall
market recorded an effective rent of RMB388.4 per sqm per
month, up 0.3% q-o-q. The average effective rent in the city’s five
core submarkets increased 0.2% q-o-q to RMB410.5 per sqm
per month. New office supply in the five core submarkets brought
about a 0.5 q-o-q percentage point rise in the vacancy rate to
5.5% at the end of Q1. Across the broader market, the vacancy
rate held at 6.6%.
Strong office demand helped drive down the vacancy rate in the
Wangjing-Jiuxianqiaoarea, from 17.3% in Q4 to 11% in Q1.
Gross effective rents in the submarket increased 0.3% q-o-q to
average RMB281.8 per sqm per month in Q1. Zhongguancun
drew the strongest demand among submarkets with net
absorption amounting to 53,000 sqm for the quarter. New office
supply was quickly absorbed and had minimal impact on market
performance. The vacancy rate has stabilized at 2.6%.
Outlook
The 2016 VAT reform has added cost pressure for landlords,
which in turn has been passed on to tenants in the form of higher
rents. This was one main factor in driving up gross effective rents
across the city despite massive future supply levels. The vacancy
rate is expected to increase over the period, while gross effective
rents should remain steady or gradually rise.
Urban regeneration has became a hot topic in recent years. In
Beijing, renovation of hotels and traditional retail projects for
office use has been popular due to the prospect of lower
operation costs and greater rental income. This trend is expected
to continue throughout the year.
Office Snapshot Q1 2017
Beijing
MARKETBEAT
cushmanwakefield
SUBMARKETINVENTORY(SQM)VACANCY RATE
NEW
COMPLETIONS
YEAR-TO-DATE
(SQM)
UNDER
CONSTRUCTION
(SQM)
GRADE A EFFECTIVERENT*
RMB/SQM/MOUS$/SF/MOEUR/SF/MO
CBD3,083,9268.1%68,0002,737,000384.25.2 4.8
Financial Street1,416,5502.7%34,017624,388660.78.9 8.3
Lufthansa1,008,2937.1%048,957353.14.8 4.4
East2ndRing Road1,130,6553.0%0457,000343.44.6 4.3
Zhongguancun1,046,9722.6%54,000600,000351.64.7 4.4
BEIJING CBD Grade A Total7,686,3965.5%156,0174,467,345410.55.5 5.1
WangJing-Jiuxianqiao560,66011.0%0424,208281.83.8 3.5
Olympic Games Village (OGV)557,03915.0%0342,437368.55.0 4.6
Beijing Development Area (BDA)474,64820.5%00162.02.2 2.0
Li’zeFinancial Business District--01,439,717---
Others*179,353-0602,529---
BEIJING OverallGrade A Total9,458,0966.6%156,0177,276,236388.45.2 5.0
KeyLeasing Transactions Q1 2017
PROPERTYSUBMARKETTENANTSQMLEASE TYPE
IKEA TowerWangJing-JiuxianqiaoKapokcn7,407New Lease
HuitongOffice ParkOthersAllianz Group6,243Relocation
Lei ShingHong CenterWangJing-JiuxianqiaoOmnicom5,910Relocation
World Financial CenterCBDAirbnb3,558New Lease
INDIGOWangJing-JiuxianqiaoKidsland2,358New Lease
Bo RuiTowerCBDZimmer1,000Relocation
Cyber 01 TowerCBDInteroneChina919Renewal
Significant Projects Under Construction
PROPERTYSUBMARKETMAJORTENANTSQMCOMPLETION DATE
International Electronic HeadquarterWangJing-JiuxianqiaoN/A160,000Q2 2017
CSCEC TowerOGVN/A95,437Q2 2017
HademenPlazaOthers (Chongwenmen)N/A86,000Q2 2017
CRCC Plaza Office Tower AOthersN/A36,412Q2 2017
ZRT Tower BeijingOthersN/A39,487Q22017
World Profit Center IILufthansaN/A48,957Q32017
HengyiTowerOGVN/A72,000Q3 2017
China Life Financial Center (Z13) CBDN/A120,000（TotalGFA)Q12018
Samsung Headquarters Tower (Z2b)CBDN/A120,000（TotalGFA)Q12018
Chia Tai Group (Z14)CBDN/A220,000（TotalGFA)Q12018
* Projects of others not belonging to any of the above submarkets.
** Effective Rent is calculated based on gross floor area and assuming a letting mid floors for a typical three-year lease term with rent-free periods factored in.
*** Exchange Rate: 1 USD = 6.8923 CNY = 0.9275 EUR
Office Snapshot Q1 2017
Beijing
MARKETBEAT
cushmanwakefield
James Shepherd
Managing Director
Research, Greater China
Tel: +86 21 2208 0769
james.shepherd@cushwake
Sean Wang
Vice President, Greater China,
Managing Director, North China
Tel: +86 10 8519 8168
sean.s.wang@cushwake
Sabrina Wei
Senior Associate Director
Head of North China Research
Tel: +86 10 8519 8087
sabrina.d.wei@cushwake
Contact
Jonathan Wei
Senior Director
Head of Mainland China Occupier Services
Tel: +86 21 22080119
jonathan.cy.wei@cushwake
Charles Yan
Senior Director
Head of North China Occupier Services
Tel: +86 10 8519 8194
charles.qh.yan@cushwake
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop and live. The firm’s 43,000
employees in more than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the world. In
Greater China, the firm has a co-branded presence under the name of Cushman & Wakefield and operates 20 offices in the region. Cushman & Wakefield is
among the largest commercial real estate services firms with revenues of $5 billion across core services of agency leasing, asset services, capital markets,
facility services, global occupier services, investment & asset management, project management, tenant representation and valuation & advisory. To learn
more, please visit cushmanwakefield.
Disclaimer
This report has been produced by Cushman & Wakefield for use by those with an interest in commercial property solely for information purposes. It is not
intended to be a complete description of the markets or developments to which it refers. The report uses information obtainedfrom public sources which
Cushman & Wakefield believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete. No warranty or
representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein andCushman & Wakefield shall
not be liable to any reader of this report or any third party in any way whatsoever. Cushman & Wakefield shall not be held responsible for and shall be
released and held harmless from any decision made together with any risks associated with such decision in reliance upon any expression of opinion in the
report. Our prior written consent is required before this report can be reproduced in whole or in part.
Aaron Li
Director
Head of North China Office Agency
Tel: +86 10 8519 8225
aaron.sc.li@cushwake
Office Snapshot Q1 2017
Guangzhou
MARKETBEAT
Economic Indicators
Guangzhou Grade A Office Market Indicators
Guangzhou Grade A Office Rent & Vacancy Rate
CBD Supply Pipeline
cushmanwakefield
Economy
Guangzhou’s economy expanded 8.2% y-o-y in 2016
compared to 8.4% in 2015. In Q4, the tertiary sector
increased 9.4% y-o-y, while CPI accelerated 2.7% y-o-y.
Market Overview
TianheSports Center added the 30,227-sq m Tian’anLife
Center in Q1, the first new building in the submarket since
2012. Guangzhou Grade A office stock increased to 4.7
million sqm.
Influenced by the holiday, Guangzhou Q1 office market
was relatively stable. The overall vacancy rate in
Guangzhou fell 1.4 percentage points q-o-q to 12.9% in Q1.
By submarket, the vacancy rate in TianheSports Center
jumped to 7.6% due to new supply, up from 3.6% in Q4.
ZhujiangNew Town remained popular and saw the
vacancy rate tighten to 12.4%, down from 13.2% in Q4.
Yuexiu’s vacancy rate decreased 3.2 percentage points to
5.1% in Q1 thanks to strong performance at Lai Fung
Center. The vacancy rate in Pazhouplunged 14.9
percentage points q-o-q to 31.0% in Q1 due to strong
leasing performance.
Net absorption amounted to 93,112 sqm in Q1, with nearly
70% of quarterly absorption achieved in Pazhou.
Competitive rent helped to more than double Pazhou’s
absorption from the previous quarter to 65,100 sqm in Q1.
Rent for Grade A offices averaged RMB170.4 per sqm per
month in Q1, up 1.0% q-o-q. Among submarkets, Pazhou
led the way with 4.0% q-o-q average rent growth thanks to
infrastructure improvements and decreasing vacancy.
Yuexiu’s average rent grew 2.7% q-o-q on falling vacancy.
Average rent in ZhujiangNew Town increased 0.7% q-o-q
due to growing occupancy levels and tight supply. Average
rent in TianheSports Center remained at RMB171.7 per
sqm per month.
Outlook
Ahead, Guangzhou is set to receive 238,554 sqm of new
Grade A office supply over the next three quarters, with all
new buildings in Pazhou. Leasing transactions should pick
up in Q2, causing rent to edge up and vacancy levels to fall.
Q316Q416Past12-MonthGrowth
GDP Growth8.1%8.2%
ServiceSector GDP
Growth8.9%9.4%
CPI Growth2.6%2.7%
Q416Q1 1712-Month Forecast
AverageFace Rent*
(RMB/sq m/mo)168.8170.4
Vacancy Rate14.3%12.9%
Source: Guangzhou Statistics Bureau Note: Growth figure is y-o-y growth
10-year Historical Average = 420,097sqm
GUANGZHOU OFFICE
Source: Cushman & Wakefield Research
Source: Cushman & Wakefield Research
Source: Cushman & Wakefield Research
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
160
162
164
166
168
170
172
174
Va
ca
nc
y R
ate
(%
)
Fa
ce
R
en
t (R
MB
/sq
m/
mo
)
Face RentVacancy Rate (%)20
40
60
80
100
120
20172018201920202021
GF
A
(‘0
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sq
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*Data only covers major business hubs in urban Guangzhou
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