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City’s Grade A office market continues to rebound
Shanghai’s Grade A office market extended its recovery in the second quarter of 2021 amid the steady release of pent-up demand in both central business districts and decentralized locations, according to the latest research by major international property consultancies.
Net absorption, a barometer of market demand for office space, stood at 450,000 square meters between April and June, an increase of about 50 percent from the previous three-month period, JLL said in its regular quarterly report.
“Domestic companies remained the major driving force in the office leasing market, with financial and professional service firms posting strong demand particularly in Pudong’s CBD areas,” said Stanley Jiang, head of project leasing for JLL Shanghai markets.
“In decentralized areas, which accounted for some three-quarters of total net absorption, technology, media and telecommunications, and manufacturing and trading companies accounted for a large share of the leasing activity, mainly propelled by consolidation and expansion needs.”
Overall rentals in CBD and decentralized locations edged up by 0.3 and 0.7 percent, respectively, from the first quarter, despite somewhat mixed performances along the east and west banks of the Huangpu River.
A separate report released by CBRE showed that net absorption in the first six months of this year has already surpassed all of 2020.
“While new supply jumped 245 percent year-on-year to 421,000 square meters during the first six months, the overall vacancy rate fell 1.9 percentage points to 17.8 percent across the city by the end of June, the lowest since the first quarter of 2019,” said Ivy Lu, head of research at CBRE Eastern China.
“Submarkets, including Qiantan in Pudong and Xuhui Bund West in Xuhui, were strong performers, with the vacancy rate in Qiantan standing at 13 percent, the lowest in Pudong.”
By industry, technology, media and telecom, financial services and consumer product manufacturing led the pack in new leasing during the first six months, accounting for 30, 15 and 11 percent, respectively, of the total in terms of leasing area.
By submarket, Qiantan, Wujiaochang and Lujiazui were the most popular among Grade A office tenants in the first half of 2021, accounting for 11, 10 and 8 percent, respectively. Net absorption for 2021 will likely be the highest in years.
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