“Amidst market adjustments, proactive strategies from both landlords and tenants are shaping the future of the office sector. While some tenants leverage early lease negotiations to secure better terms, others lock in quality space well in advance.”

JAMES MACDONALD, SAVILLS RESEARCH



Vacancy rates decline further

• No new Grade A supply was handed over in Q3/2024, leaving the total stock at 2.7 mn sqm.

• Net take-up increased 14.2% in Q3/2024 to 27,500 sqm, pushing take-up in the first three quarters of 2024 to 58,200 sqm, less than 40% of FY2023.

• Huanglong and Qianjiang New City contributed 80% of the net absorption in the first three quarters of 2024. Meanwhile, Qingchun Road and Future Sci-tech City recorded office space being handed back to the market.

• New demand continued to absorb the existing stock, with the citywide vacancy rate falling 1.0 ppt in Q3/2024 to 25.8%. This represents the fourth consecutive quarterly decline, totalling 5.2 ppts YoY.

• Grade A office rents fell 1.6% in Q3/2024 to an average of RMB4.3 psm pday, with the smallest declines (-0.7%) in primary locations and the largest fall (-4.1%) in emerging areas.

• Leasing activity has been driven by service companies, particularly law firms among the professional services and education institutions among consumer services.

• An influx of new projects in 2025 is likely to boost upgrading demand from older developments.