Beijing Figures Q2 2023

Office

Three new projects in Tongzhou were delivered in Q2 2023, pushing up citywide vacancy. The TMT sector led demand, followed by finance, resources and utilities State-Owned Enterprises (SOEs). Citywide net take-up turned positive, mainly driven by emerging submarkets. Rents continued to decline.

Retail

Several new malls came on stream this quarter with high occupancy, while numerous old projects closed for renovation. F&B, fashion and café & tea shops were the top demand drivers. High-end and low-end categories outperformed mid-range ones. Average rents bottomed out thanks to growth in CBD rents.

Logistics

While tenants motivated by flight-for-cost drove demand for outer Beijing locations, several recently delivered projects took time to digest, driving down net take-up and causing rental growth to lose momentum. Spillover demand benefited Langfang and Tianjin over the quarter.

Business Park

One new project was delivered in the Dongsheng submarket in Q2 2023. The TMT sector underpinned leasing demand. Vacancy declined in Z-Park, BDA and Fengtai, but rose in Shangdi and BEZ. Average rents fell as landlords in Greater ZGC area implemented larger rental cuts.

Investment

Investment activity rose marginally over the quarter but remained below the recent historical average. Life sciences and healthcare corporations were especially active. Retail attracted both the largest single deal as well as the biggest investment volume of any sector in Q2 2023. Sellers are adopting a more flexible attitude towards pricing as they seek to offload assets.