MARKET OVERVIEW

As the pandemic was effectively contained in China, the domestic economy rebounded with GDP’s double-digit growth in Q1/2021.  Meanwhile, Beijing’s Garde A office market also bounced back at the beginning of the year. As a result, the citywide net absorption in the first quarter soared to 166,034 sq m. More impressively, the Q1 absorption rate was equal to 94% of the total annual absorption for 2020. Three new projects were launched in Q1/2021, bringing a total of 318,363 sq m to Beijing’s Grade A office market. The average vacancy rate stayed at a relatively high level of 16.6%, and the average rent dropped 4.2% year-on-year (YoY) to RMB344.9 per sq m per month in Q1/2021. Information technology, finance, professional services and healthcare companies were the top demand drivers for office space, collectively accounting for 70.5% of the total leased area in Q1/2021.

Supply

Three new projects were launched in Q1/2021, namely Beijing Innovation Centre located in the Asia-Olympic area, and Sino-Ocean Rayzone and Jintang Westlink Plaza located in Lize FBD, bringing 318,363 sq m to Beijing’s Grade A office market. Citywide Grade A office stock reached 13.17 million sq m (including self-use GFA) by the end of Q1/2021. Over 1.3 million sq m new supply is scheduled to be launched in 2021, and the majority will be concentrated in the CBD core area and Lize Financial Business District. With this supply influx, landlords are actively adjusting leasing strategies by offering rental discounts or incentive options to attract or retain tenants.