MARKET OVERVIEW

Beijing office market showed signs of recovery and performed better than expected at the beginning of 2024. After the pandemic from previous years, the overall economic has recovering steadily. Leasing demand in the Beijing office market saw a decent rebound in Q1/2024. Thanks to the declining volume of new supply this year, landlords could seize the opportunities to accelerate the destocking process in the Beijing office market.

The Grade A office market in Beijing saw no new projects in Q1/2024 and the citywide Grade A office stock remained at 15.21 million sq m (including self-use areas). The citywide vacancy rate edged down by 0.2 percentage points (ppts) quarter-on-quarter (QoQ) to 20.2% while the Grade A office rent fell 2.5% QoQ to an average of RMB295.7 per sq m per month.

SUPPLY

No new projects entered the Beijing Grade A office market in Q1/2024, indicating less annual supply than previous years. As a result, the citywide Grade A office stock totalled 15.21 million sq m (including self-use space) by end-Q1/2024.

After the supply peak in 2023, the annual supply of Beijing Grade A office in 2024 is expected to be modest. Although over 570,000 sq m of new supply is expected to enter the Grade A office market in the following months, it is still a good opportunity to rebalance supply-demand in 2024. As a result, destocking is expected to be the theme of this year.