“Q2/2024, no new supply was launched onto the Wuhan Grade A Office market for three consecutive quarters. Service sector remained active in the leasing market, pushing the vacancy rate down to 38.8%. Limited new supply present destocking opportunities, but the rental decline is expected to persist.”

JAMES MACDONALD, SAVILLS RESEARCH



Leasing demand from IT and services continue to tick up.

• In Q2/2024, no new supply was launched onto the Wuhan Grade A office market. By quarter-end, citywide office volume remained at 2.92 million sqm.

• By demand side, quarterly new absorption was 5,700 sqm, down 25.9% QoQ. Accumulated take-up in H1/2024 reached 13,000 square meters, down over 70% YoY. The service industry continued upgrade and opening activities. Also, nonacademic education showed signs of recovery.

• Leasing activities were driven by upgrade and relocation activities, which accounted for 52.6% and 16.7% respectively, and 66.9% in total during H1/2024.

• By the end of Q2/2024, the average vacancy rate of Grade A office decrease by 0.2 ppts QoQ and 0.6 ppts YoY to 38.8%. The average Grade A office rent remained in the downward trend, recorded at RMB 86.4 psm pmth, down 8.5% YoY and 1.3% QoQ. Accumulated decrease ticked up to 2.9% in H1/2024.

• Looking forward to H2/2024, the new supply of Grade A office is anticipated to reach 104,000 sqm. This year may still be a favourable time to destock due to limited supply, but it is still difficult to turn down the mark