Home » Business » Real Estate
Tenants favor decentralization
By Cao Qian |
December 18, 2009, Friday
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Print Edition
Print Edition
THE supply of high-quality office space in the Ever-Bright City area in the northern Zhabei District is expected to grow significantly in the next two years as land constraints in the CBD as well as the rapid expansion of mass transport are boosting the appeal of decentralization among cost-sensitive tenants.
Under the district government plan, seven new commercial projects with a total of more than 1 million square meters of high-quality office space will be completed by then on Hengfeng Road alone, the main commercial street in the 2 square kilometer Ever-Bright City area surrounding the Shanghai Railway Station, according to Liu Jianwei, head of the Zhabei Ever-Bright City Development Office.
"The emergence of decentralized Grade-A (office) supplies is a necessary step in the maturity of the city's real estate market," said Kevin Chan, head of project leasing at Jones Lang LaSalle Shanghai. "The positive feedback from tenants also reinforced that trend."
For instance, B.M. InterContinental Center, a newly completed 55-story Grade A office building near the railway station, has already leased more than 30 percent of its space over the past two months despite unfavorable market conditions. Its average rental of 5 to 6 yuan (73 to 88 US cents) per square meter per day is about 30 to 40 percent lower than those asked by same quality buildings in the traditional central business district areas.
According to an earlier industry report, decentralized Grade-A office supplies, referring to high-quality office space located in non-CBD but urbanized areas, are expected to more than triple in Shanghai over the next four years. The total stock will likely jump to 1.8 million square meters by the end of 2013, Jones Lang LaSalle predicted earlier.
About 83 percent of the total stock of decentralized Grade-A office space will be in the Puxi area, with the majority in Putuo, Hongkou, Zhabei and Changning districts, the firm said.
Grade-A office rents dropped across the city in the third quarter, falling 3.6 percent from the April-June period, amid abundant supply and comparatively weak though improving leasing activities, according to Jones Lang LaSalle research.
Under the district government plan, seven new commercial projects with a total of more than 1 million square meters of high-quality office space will be completed by then on Hengfeng Road alone, the main commercial street in the 2 square kilometer Ever-Bright City area surrounding the Shanghai Railway Station, according to Liu Jianwei, head of the Zhabei Ever-Bright City Development Office.
"The emergence of decentralized Grade-A (office) supplies is a necessary step in the maturity of the city's real estate market," said Kevin Chan, head of project leasing at Jones Lang LaSalle Shanghai. "The positive feedback from tenants also reinforced that trend."
For instance, B.M. InterContinental Center, a newly completed 55-story Grade A office building near the railway station, has already leased more than 30 percent of its space over the past two months despite unfavorable market conditions. Its average rental of 5 to 6 yuan (73 to 88 US cents) per square meter per day is about 30 to 40 percent lower than those asked by same quality buildings in the traditional central business district areas.
According to an earlier industry report, decentralized Grade-A office supplies, referring to high-quality office space located in non-CBD but urbanized areas, are expected to more than triple in Shanghai over the next four years. The total stock will likely jump to 1.8 million square meters by the end of 2013, Jones Lang LaSalle predicted earlier.
About 83 percent of the total stock of decentralized Grade-A office space will be in the Puxi area, with the majority in Putuo, Hongkou, Zhabei and Changning districts, the firm said.
Grade-A office rents dropped across the city in the third quarter, falling 3.6 percent from the April-June period, amid abundant supply and comparatively weak though improving leasing activities, according to Jones Lang LaSalle research.
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