Shanghai Market View_Q2 2021

TMT sector spurs office and business park demand; Institutional investors drive increase in en-bloc deals

OFFICE                                                                                      

Robust demand pushed year-to-date net absorption above the previous year’s level. Domestic demand continued to drive office leasing activity, with the IT, new media and e-commerce sectors especially prominent. 60% of new leases signed this quarter involved relocation and expansion.

RETAIL

Strong pre-leasing activity in the three new projects completed in Q2 2021 propelled net take-up to a record quarterly high. Limited availability in prime areas supported the first rental gains recorded since Q4 2019. F&B retailers dominated leasing demand, with coffee and tea shops most prominent.

LOGISTICS

Net absorption rebounded from the previous quarter, while average rents posted slight gains. The period saw strong expansion by 3PLs and courier companies. The domestic economic recovery and the government’s dual-circulation strategy will continue to spur robust demand for logistics space.

BUSINESS PARK

Net absorption reached the highest quarterly total since the onset of the pandemic. The TMT sector contributed more than 60% of leasing demand, with several e-commerce platforms selecting Linkong and Shibei for upgrading relocations.

INVESTMENT

15 en-bloc transactions worth a combined RMB 34.46 billion were closed in Q2 2021, triple the size of the previous quarter. Institutional buyers are increasingly shifting their focus to alternative assets such as hotels, warehoused and data centres.