Beijing's office market posts record-breaking performance

Beijing's office market registered a record-breaking performance this year, as shown from the high net absorption and low vacancy rate, which may offer more expectations for 2022, experts said.

Net absorption reached about 1.14 million square meters in 2021, marking the best record in history, according to a recent report of Colliers International, a global real estate agency.

Most demand came from the Central Business District, Lize Financial Business District and Ya'ao area, where communities and facilities related to the Olympics are located, it said. Many new property projects have entered those three areas in recent years.

The surge of demand mainly owed to expansion of internet technology companies. Lu Ming, director of the research department for North China at Colliers International, said this year new bulk lease transactions (in which the rental area is larger than 5,000 square meters) have reached 1.4 million sq m, including 450,000 sq m in Grade A office and 700,000 sq m in industrial parks. Lu added new economy companies have become the most important factor influencing Beijing's office market.

Meanwhile, the vacancy rate fell to 15.1 percent, down 4.4 percentage points year-on-year. As a result of the growing demand from top internet companies, four of the Grade A office markets recorded a vacancy rate lower than 10 percent. Lize's vacancy rate dropped from 76.6 percent to 48.9 percent annually.

Drop of rental stabilized in the second half of 2021. Average rental reached about 340.4 yuan per sq m per month in the fourth quarter, down 2.9 percentage points year-on-year. The same data was 8 percentage points last year. Some sub-markets showed a growth in rental, such as Wangjing, Jiuxianqiao and CBD areas, according to the report.

Industrial parks also recorded a good performance this year, with the vacancy rate falling 7.6 percentage points year-on-year to 14.1 percent, and the average rent growing 3.5 percent annually, it said.

Though this year the city has seen several outbreaks of the COVID-19, its impact has largely weakened, resulting in a surge in the demand for office spaces. As the Xiong'an New Area and Beijing's sub-center become more mature and handle more non-capital functions, the city pattern and industrial distribution will see a drastic change in the next five years, said Chen Nan, deputy director general of North China at Colliers International.