Beijing Market View Q1 2021

Tech hubs record strong leasing and investment activity; Logistics take-up and rental growth accelerate

OFFICE

Strong demand drove up overall net absorption by 13% q-o-q to 166,100 sq. m., the third consecutive quarterly gain. Demand was driven by TMT, finance, and business services companies. Overall vacancy fell by 0.4 pps to 17.5%, the first decline since Q2 2018. Average asking rents edged down 0.4% q-o-q to RMB 403.8 per sq. m. per month, with fewer buildings lowering rents.

RETAIL

Overall leasing demand picked up as foot traffic in large shopping malls returned to pre-pandemic levels. Overall vacancy fell 0.1 pps q-o-q to 10.4%. With performance polarised across different projects, average shopping mall ground floor asking rents increased by 0.2% q-o-q to RMB 36.3 per sq. m. per day.

LOGISTICS

Robust demand from fresh goods e-commerce and 3PLs ensured net absorption almost tripled q-o-q to 44,200 sq. m.. Several new leases involved large rental increases: a trend that helped push up average rents by 1.4% q-o-q to RMB 51.7 per sq. m. per month.

BUSINESS PARK

Demand continues to recover, with net take-up recorded at 154,600 sq. m. in Q1 2021. Strong demand helped pull down overall vacancy by 2.5 pps q-o-q to 19.1%. While average asking rents decreased by 0.4% q-o-q to RMB 161.7 per sq. m. per month, performance diverged across submarkets.

INVESTMENT

Investment activity picked up over the quarter, with Beijing emerging as China’s most active market. Ten deals worth a combined total of RMB 20.9 billion were concluded in Q1 2021, marking an increase of 3.8 q-o-q and 40% y-o-y.