ECONOMIC OVERVIEW

Beijing office market kicked off with a slow start in 2023. The removal of COVID restrictions guaranteed business activities back to normal while enterprises resumed their leasing plans. Grade A office leasing inspections in Beijing rebounded swiftly, but it is still expected to take time for this to translate into new leases or for self-sustaining momentum to gain sufficient steam.

One new project was launched in Q1/2023, adding a total of 57,415 sq m to the Grade A office market. The new supply and weak take-up caused the citywide vacancy rate to increase 0.5 percentage point (ppt) quarteron-quarter (QoQ) to 16.8% while the Grade A office rent fell 1.3% QoQ to an average of RMB321.7 per sq m per month.

SUPPLY

One new project entered the Beijing Grade A office market in Q1/2023, which is Tongzhou Centre C01 tower in the Tongzhou Canal Business District, bringing a total of 57,415 sq m of new supply to the Grade A office market. The citywide Grade A office stock totalled 14.4 million sq m (including self-use space) by the end of Q1/2023.

Over 570,000 sq m of new supply is expected to enter the Grade A office market in the remainder of 2023, a result of the pandemic-related delays in the construction progress. New projects were mainly located in Asia-Olympic, East Second Ring Road, Zhongguancun and Tongzhou precincts. The increase in supply, along with the decline in demand, will unquestionably increase the pressure on the market’s revitalization.