Office Snapshot Q1 2017
Beijing
MARKETBEAT
Economic Indicators
Grade A CBD Market Indicators
Grade A CBD Rent & Vacancy Rate
Supply Pipeline
cushmanwakefield
Q3 16Q4 16Past12-MonthGrowth
GDP Growth6.7%6.7%
Tertiary Sector Growth7.3%7.1%
CPI Growth 1.2%1.4%
Q4 16Q1 1712-Month Forecast
Average Effective
Rent* (RMB/sqm/mo)409.5410.5
Vacancy Rate5.0%5.5%
0%
2%
4%
6%
8%
200
220
240
260
280
300
320
340
360
380
400
420
Va
can
cy
Ra
te
(%
)
Re
nt
(RM
B/s
qm
/m
o)
Overall RentVacancy Rate (%)
Source: Beijing Statistics Bureau200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
20172018201920202021
Le
tta
ble
O
ffic
e A
rea
(‘0
00
sq
m)
Core SubmarketsEmerging SubmarketsCompletion
10 year (2007–2016)Historical Average = 647,000 sqm
BEIJING OFFICE
Economy
Beijing recorded GDP growth of 6.7% y-o-y in 2016, continuing a
smooth run over the entire year. Real estate investment in fixed
assets fell to 2.1% y-o-y growth in 2016, down from 8.1% in 2015.
MarketOverview
The market welcomed a number of new office buildings, such as
China World Trade Center Tower IIIB and ZhongguancunCapital
Tower. The properties added a combined 156,000 sqm of Grade
A office supply and raised stock to 9.46 million sqm.
Beijing’s Grade A office rents remained stable in Q1. The overall
market recorded an effective rent of RMB388.4 per sqm per
month, up 0.3% q-o-q. The average effective rent in the city’s five
core submarkets increased 0.2% q-o-q to RMB410.5 per sqm
per month. New office supply in the five core submarkets brought
about a 0.5 q-o-q percentage point rise in the vacancy rate to
5.5% at the end of Q1. Across the broader market, the vacancy
rate held at 6.6%.
Strong office demand helped drive down the vacancy rate in the
Wangjing-Jiuxianqiaoarea, from 17.3% in Q4 to 11% in Q1.
Gross effective rents in the submarket increased 0.3% q-o-q to
average RMB281.8 per sqm per month in Q1. Zhongguancun
drew the strongest demand among submarkets with net
absorption amounting to 53,000 sqm for the quarter. New office
supply was quickly absorbed and had minimal impact on market
performance. The vacancy rate has stabilized at 2.6%.
Outlook
The 2016 VAT reform has added cost pressure for landlords,
which in turn has been passed on to tenants in the form of higher
rents. This was one main factor in driving up gross effective rents
across the city despite massive future supply levels. The vacancy
rate is expected to increase over the period, while gross effective
rents should remain steady or gradually rise.
Urban regeneration has became a hot topic in recent years. In
Beijing, renovation of hotels and traditional retail projects for
office use has been popular due to the prospect of lower
operation costs and greater rental income. This trend is expected
to continue throughout the year.
Office Snapshot Q1 2017
Beijing
MARKETBEAT
cushmanwakefield
SUBMARKETINVENTORY(SQM)VACANCY RATE
NEW
COMPLETIONS
YEAR-TO-DATE
(SQM)
UNDER
CONSTRUCTION
(SQM)
GRADE A EFFECTIVERENT*
RMB/SQM/MOUS$/SF/MOEUR/SF/MO
CBD3,083,9268.1%68,0002,737,000384.25.2 4.8
Financial Street1,416,5502.7%34,017624,388660.78.9 8.3
Lufthansa1,008,2937.1%048,957353.14.8 4.4
East2ndRing Road1,130,6553.0%0457,000343.44.6 4.3
Zhongguancun1,046,9722.6%54,000600,000351.64.7 4.4
BEIJING CBD Grade A Total7,686,3965.5%156,0174,467,345410.55.5 5.1
WangJing-Jiuxianqiao560,66011.0%0424,208281.83.8 3.5
Olympic Games Village (OGV)557,03915.0%0342,437368.55.0 4.6
Beijing Development Area (BDA)474,64820.5%00162.02.2 2.0
Li’zeFinancial Business District--01,439,717---
Others*179,353-0602,529---
BEIJING OverallGrade A Total9,458,0966.6%156,0177,276,236388.45.2 5.0
KeyLeasing Transactions Q1 2017
PROPERTYSUBMARKETTENANTSQMLEASE TYPE
IKEA TowerWangJing-JiuxianqiaoKapokcn7,407New Lease
HuitongOffice ParkOthersAllianz Group6,243Relocation
Lei ShingHong CenterWangJing-JiuxianqiaoOmnicom5,910Relocation
World Financial CenterCBDAirbnb3,558New Lease
INDIGOWangJing-JiuxianqiaoKidsland2,358New Lease
Bo RuiTowerCBDZimmer1,000Relocation
Cyber 01 TowerCBDInteroneChina919Renewal
Significant Projects Under Construction
PROPERTYSUBMARKETMAJORTENANTSQMCOMPLETION DATE
International Electronic HeadquarterWangJing-JiuxianqiaoN/A160,000Q2 2017
CSCEC TowerOGVN/A95,437Q2 2017
HademenPlazaOthers (Chongwenmen)N/A86,000Q2 2017
CRCC Plaza Office Tower AOthersN/A36,412Q2 2017
ZRT Tower BeijingOthersN/A39,487Q22017
World Profit Center IILufthansaN/A48,957Q32017
HengyiTowerOGVN/A72,000Q3 2017
China Life Financial Center (Z13) CBDN/A120,000（TotalGFA)Q12018
Samsung Headquarters Tower (Z2b)CBDN/A120,000（TotalGFA)Q12018
Chia Tai Group (Z14)CBDN/A220,000（TotalGFA)Q12018
* Projects of others not belonging to any of the above submarkets.
** Effective Rent is calculated based on gross floor area and assuming a letting mid floors for a typical three-year lease term with rent-free periods factored in.
*** Exchange Rate: 1 USD = 6.8923 CNY = 0.9275 EUR
Office Snapshot Q1 2017
Beijing
MARKETBEAT
cushmanwakefield
James Shepherd
Managing Director
Research, Greater China
Tel: +86 21 2208 0769
james.shepherd@cushwake
Sean Wang
Vice President, Greater China,
Managing Director, North China
Tel: +86 10 8519 8168
sean.s.wang@cushwake
Sabrina Wei
Senior Associate Director
Head of North China Research
Tel: +86 10 8519 8087
sabrina.d.wei@cushwake
Contact
Jonathan Wei
Senior Director
Head of Mainland China Occupier Services
Tel: +86 21 22080119
jonathan.cy.wei@cushwake
Charles Yan
Senior Director
Head of North China Occupier Services
Tel: +86 10 8519 8194
charles.qh.yan@cushwake
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