Beijing Figures Q3 2022

Office: Year-to-date new supply at quarter-end was the lowest since 2015. Total new leases rose by 28% q-o-q, with finance firms most active. Net absorption remained in negative territory as some firms consolidated and surrendered space. Average rents fell due to weaker performance in ZGC, Wangjing and Olympic.

Retail: Three decentralised malls opened with high occupancy. The release of pent-up demand for new stores pushed up net absorption to its highest level in five quarters. Vacancy rose as some existing properties adjusted their trade-mix. Rents continued to decline but at a slower pace.

Logistics: Three new projects were delivered this quarter, pushing up y-t-d new supply to a new annual high. Vacancy rose to its highest level in 12 years, providing abundant space for lease. Robust demand led to stronger average rental growth and driving flight-for-cost activity.

Business Park: Weaker leasing demand and downsizing by TMT unicorns led to negative net absorption and polarised submarket performance. Rising vacancy and weaker-than-expected demand prompted more landlords from the Greater ZGC area to lower rents.

Investment: Although the number of deals increased, transaction volume was lower y-o-y. Self-use buyers from new economy industries were active across a diverse range of property types and locations, with industrial parks keenly sought after. Cap rates expanded and a window of opportunity for acquisitions opened.