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RESEARCHSHAngHAi OFFiCE MARKET REPORT Q2 2018
tAblE 2
Major Grade-A offce sub-market indicators, Q2 2018
SubmarketRent(RMB / sqm / day)Rent % change (Q-o-Q)Vacancy rate
Vacancy rate
percentage point
change (Q-o-Q)
Little Lujiazui12.6↓ 0.8%4.8%↓ 1.1
Nanjing West
Road10.9↑ 1.9%2.2%↓ 4.5
Huaihai
Middle Road10.8↓ 0.9%2.2%↓ 0.6
Xujiahui7.55.3%↓ 6.9
The Century
Avenue8.8↓ 2.2%9.5%↓ 2.0
Source: knight Frank research
FIGUrE 1
Grade-A offce rental and price indices
In Q2, the average rent in Shanghai’s Core
CBDs remained stable at RMB11.6 per
sqm per day, compared with the previous
quarter. However, various sub-markets
recorded divergent rental performances.
The average rent of offce buildings along
Nanjing West Road increased by 1.9%
Q-o-Q to RMB10.9 per sqm per day (see
Table 2). Strong leasing demand from
advertising and innovative technology
companies was one of the main drivers
pushing up the average rent. For example,
Meikao rented 1,700 sqm of high-foor
offce space in Plaza 66 Tower One (see
Table 3), while high-tech data storage
company Sandisk moved from Jiushi
Fuxing Building on Huaihai Middle Road
to Wheelock Square, renting 1,300 sqm of
space.
The average rents in Huaihai Middle Road
and Little Lujiazui slightly decreased
by 0.9% and 0.8% to RMB10.8 and
RMB12.6 per sqm per day respectively
(see Table 2), mainly attributable to
increased vacant space added by the
relocation of companies in addition to
existing vacancies.
Despite lukewarm overall leasing
demand, traditional fnancial companies
remained one of the few demand growth
points in the market. For example, Bank
of Communications leased 1,500 sqm of
offce space in Lujiazui Century Financial
Plaza in Q2. Meanwhile, foreign insurance
companies also expanded rapidly in local
market, creating steadily rising offce
leasing demand. For instance, US-
based AIG and Sino-Dutch joint venture
insurance company Tongfang Global Life
respectively leased 2,500 sqm of offce
space in Century Link, Century Avenue,
Pudong.
In Q2 2018, the average Grade-A office
rent fell another 1% quarter on quarter
(Q-o-Q) to RMB9.5 per sqm per day (see
Table 1).
In Q2, the overall Grade-A office
occupancy rate increased by 0.6
percentage point to 94.5% Q-o-Q (see
Table 1).
Many office landlords tried to improve
occupancy by lowering asking rents and
offering better incentives.
Although leasing demand continued to
weaken, traditional finance and co-working
companies were relatively active.
In Q2, the net absorption in Shanghai’s
Grade-A office market was approximately
348,350 sqm (see Figure 2), of which
104,150 sqm was recorded in Core
CBDs. Divergent market performances
were witnessed in Pudong and Puxi. The
vacancy rate in Puxi decreased by 2.0
percentage points to 4.3%, while that
rENtS AND
prICES
Source: knight Frank research
NEW OFFICE SUpplY
CONCENtrAtED IN
pUDONG AND mINHANG
IN Q2 2018
New Grade-A offce supply in the second quarter (Q2) of
2018 was approximately 250,000 sqm, a 46% decrease
from the previous quarter (see table 1).
in Pudong increased by 1.3 percentage
points to 7.2% due to a large amount of
new supply in the first half of the year.
In the second half of 2018, more than
800,000 sqm of office space will be newly
added to the market. Facing the pressure
from new supply, Grade-A office rents are
expected to fall continuously.
In Q2, 36 regional headquarters of
multinational corporations opened
their offices in Shanghai, representing
that an aggregate of over 630
regional headquarters of multinational
corporations had entered the city
since 2002. Strategic geographical
location and resource advantages made
Shanghai the first choice for foreign
investors to set up regional headquarters
in China. Therefore, in the long run,
leasing demand for Grade-A office
buildings from foreign enterprises will
remain stable.
tAblE 1
Shanghai Grade-A offce market indicators
IndicatorQ2 2018 fgureQ-o-Q changeOutlook (Q3 2018)
New supply249,476 sqm↓ 46%↗
RentRMB9.5 / sqm / day↓ 1.0%↘
Vacancy rate5.5%↓ 0.6 percantage point↗
PriceRMB66,500 / sqm↑ 3.3%↗
Source: knight Frank research
tAblE 3
Major Grade-A offce leasing transactions, Q2 2018
DistrictBuildingZoneArea (sqm)
HongkouShanghai PointHigh3,000
Jing’anPlaza 66 Tower One High1,700
Source: knight Frank research
Note: all transactions are subject to confrmation
tAblE 4
Major Grade-A offce strata-title sales transactions, Q2 2018
DistrictBuildingFloor / unitArea (sqm)Price (RMB / sqm)
MinhangMacrolink International Centre3rd foor unit68462,999
XuhuiGreenland CentrePhase Two8th foor unit 55067,744
XuhuiGreenland Centre16th foor unit27672,034
Source: Shanghai real Estate trading Centre / knight Frank research
Note: all transactions are subject to confrmation50
100
150
200
250
300
350
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2
200720082009201020112012201320142015201620172018
2003Q1=100Rental indexPrice index研究报告上海写字楼市场报告 2018 年第二季度There were no new projects completed
in core CBDs during Q2, with new
space mainly concentrated in Pudong
and Minhang, accounting for about
60% of the total new supply. Building
3 of Pudong Financial Plaza in Century
Avenue, Pudong was completed and
delivered, bringing 48,000 sqm of office
space to the market. The third phase
of Mapletree Business City Shanghai
in Minhang also came online, providing
101,476 sqm of office space. We expect
over 800,000 sqm of new supply to be
completed in the second half of the year,
with that in emerging business districts
such as Hongqiao CBD and Qiantan
accounting for more than half of the total.
In Q2, the overall vacancy rate in the
Shanghai’s office market decreased by
0.6 percentage point Q-o-Q to 5.5%.
The vacancy rates in the Core CBDs of
Nanjing West Road and Little Lujiazui
reduced by 4.5 and 1.1 percentage
points respectively (see Table 2). The
active absorption of vacant office space
contributed to the declines.
The vacancy rate in traditional CBDs fell
by 1.6 percentage points Q-o-Q to 4.7%.
Among such CBDs, Xujiahui’s vacancy
rate plunged to about 5.3%, a decrease
of about 6.9 percentage points from the
previous quarter as co-working and high-
tech enterprises effectively absorbed
In Q2, Shanghai’s office investment
market was active. Amcorp Properties and
Chelsfield Group jointly bought five storeys
in LL Land Building, covering 9,769 sqm of
space. Located at the junction of Nanjing
West Road and Chengdu North Road,
LL Land Building, previously known as
Nanzheng Building, has a total gross floor
area of 110,714 sqm.
SUpplY, tAkE-Up AND VACANCY
INVEStmENt mArkEt
2018年第二季度，上海甲级写字楼平均租
金环比继续下跌1%至每天每平方米人民币
9.5元（见表一）
第二季度，上海写字楼市场整体出租率环
比增加0.6个百分点至94.5%（见表一）
业主方主动降租以及给予更好的激励政
策，提升了写字楼的出租率
虽然市场整体需求持续减弱，不过传统金
融业和联合办公租赁需求较为活跃
第二季度，上海甲级写字楼市场净吸纳面
积约为348,350平方米（见图二），其中核
心商务区的净吸纳面积为104,150平方米
FIGUrE 2
Grade-A offce supply, take-up and vacancy rate
二季度写字楼新增供应
集中在浦东及闵行
2018年第二季度，上海甲级写字楼市场新增办公面
积约250,000平方米，环比减少46%（见表一）
表一
上海甲级写字楼市场参考指标
指标2018年第二季度数字按季变幅预测(2018年第三季)
新增供应249,476平方米↓46%↗
租金人民币9.5元/平方米/天↓1.0%↘
空置率5.5%↓0