① The Beijing office market has achieved positive decline in the overall market for several consecutive quarters. ② According to Colliers International's report, the average annual supply of 560,000 square meters of office buildings in Beijing over the next three years has basically been set.
Financial Services Association, March 28 (Reporter Li Jie) The Beijing office market has been undergoing a positive decline in the overall market for several consecutive quarters.
Colliers International's latest report shows that in the first quarter of 2024, Beijing's Grade A office buildings continued the trend of the fourth quarter of last year and once again achieved positive absorption, reaching 12,000 square meters, an increase of 3.7% over the previous year. The removal was mainly concentrated in the Olympic and Zhongguancun regions of Asia.
However, the B-grade office building market and industrial park market have been exhausted after experiencing large-scale integration of the main tenant industry in the past two years, and have begun to decline continuously.
Among them, the net absorption volume of the Grade B office market in the first quarter of this year was 55,000 square meters. This is already 3 consecutive quarters of positive removal in the second half of last year, with a cumulative removal volume of close to 180,000 square meters; the industrial park market has also been eliminated for two consecutive quarters, with a cumulative removal volume close to 130,000 square meters, while the net absorption volume in the first quarter of this year was 58,000 square meters.
In terms of rents, the decline in grade A office rents narrowed in the first quarter. According to Colliers International data, the monthly net effective rent for Grade A office buildings in Beijing in the first quarter was 291.4 yuan/square meter, down 2.9% from the previous month, and the decline narrowed by 0.3 percentage points; the monthly net effective rent for Grade B office buildings fell to 186.6 yuan/square meter, and the monthly net effective rent in the industrial park market fell to 117.5 yuan/square meter.
“From an asset class perspective, when the overall market rent falls to a certain level, whether it is a grade A, grade A, or grade B office building, the leasing strategy will be adjusted, with a robust tenant portfolio bearing the brunt. For quality customer resources, rent levels are the most central factor in all competitive dimensions.” Li Juan, managing director of Colliers International Beijing, thinks.
It further stated that as the adjustment of the Beijing office building market becomes the norm, for landlords, healthy rental rates and stable cash flow are the core goals of operation during the downturn in the market.
Colliers International believes that in the second half of 2023, the supervisory authorities implemented a series of policies to promote economic growth, and their effects will continue to be evident this year. Under the general work tone of “seeking progress through steady progress, promoting stability first, then breaking”, the development of new quality productivity has become the core element of China's economic growth in the next phase, which will have a positive impact on all walks of life. However, enterprises expect that it will take time for new office demand to be implemented in the market, and it will also take time for market confidence to recover and actual demand to be implemented.
“The average annual supply of 560,000 square meters of office buildings in Beijing is already set; on the demand side, new quality productivity will lead the new direction of future demand, the characteristics of the industry will shift to intelligence-intensive and technology-intensive, and the pace of demand release will also become more rational.” Colliers International analysts said.