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BEIJING: Corporate occupiers of office space in first-tier mainland cities should prepare themselves for higher rents because of strong demand and tight supply, property consultants say.
The mainland's overall economic recovery is fuelling the development of its commercial real estate market, Cushman & Wakefield says in its latest research report.
In Beijing, growing demand for high-quality office space and limited new supply drove up the monthly average net effective rent of grade A offices to 366 yuan (RM169.92) a square metre, 13.6% higher than that of the first quarter of this year.
However, if the currently available rental space is taken into account, the net effective rent is as high as 401 yuan per sq metre per month.
Another property consultant, DTZ, said the Beijing office market had become a landlords' market.
"Landlords tend to select high-quality tenants to enhance the positioning of their projects by raising rents and reducing rent-free periods," it said. "We expect average rent to keep going up and the vacancy rate to fall further in the near future."
In Shanghai, the rapid expansion of both domestic and global corporations has been the primary force driving rents up. The net effective rental of grade A offices saw a quarter-on-quarter 7.7% increase, reaching 391 yuan per square metre per month, Cushman & Wakefield said.
Shenzhen is also witnessing a growing number of domestic firms searching for high-quality space, pushing up grade A office rents to 269 yuan per square metre per month, a 6.3% rise from last quarter.
Andy Zhang, managing director of Cushman & Wakefield's China operations, said: "Beijing is leading the tier-one cities to a new phase of fast growth in the office market. We do not see any sign of this trend slowing down, therefore corporate occupiers should prepare themselves for a higher-rental office market." — SCMP
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