“Increased government support for the economy will take time to impact businesses. However, this support is expected to gradually lead to higher activity levels and increased office demand.”

JAMES MACDONALD, SAVILLS RESEARCH



Vacancy rate decrease provide some breathing space

• One new project in a decentralised area was handed over in Q3/2024, adding 69,000 sqm to the office market, pushing the overall stock to 19.4 million sqm by the end of Q3/2024.

• The citywide vacancy rate fell by 0.5 ppt QoQ to 21.8% as new supply pressure eased. Significant take-up was recorded in Huamu and Qiantan, reducing the decentralised area vacancy rate by 1.0 ppt QoQ.

• Net take-up was 147,000 sqm in Q3/2024, bringing year to date to 630,000 sqm, equivalent to FY2023.

• Grade A office rents fell 4.3% in Q3/2024 to an average of RMB 6.1 psm pday. Prime, non-prime, and decentralised market rents fell by 5.0%, 4.2%, and 4.0%, respectively.

• Domestic companies remained active, accounting for 68% of tracked leases. Finance, manufacturing, and retail trading companies were the primary sources of demand, accounting for 45% of leasing deals.

• Despite finance companies still being one of the main sources of demand, a number of small PE fund firms have downsized or closed, pushing vacancy rates up in Lujiazui and Zhuyuan.