China Figures Q4 2022

Office

New office supply in the 18 major cities tracked by CBRE reached 1.55 million sq. m. in Q4 2022. Measures to contain the spread of COVID-19 and the resulting economic slowdown combined to ensure office net absorption in the 18 major cities fell by 12% q-o-q to 510,000 sq. m. Weak demand and industrial consolidation pushed up nationwide office vacancy by 0.6 pps q-o-q to 22.9% at the end of 2022. Nationwide office rents continued to decline, falling by 0.7% q-o-q.

Retail

Approximately 2.6 million sq. m of new shopping mall supply was completed nationwide in Q4 2022. Nationwide net absorption was 1.1 million sq. m., an increase of 37% q-o-q but down 43% from the same period of 2020. Overall nationwide retail vacancy climbed to 8.9% in Q4 2022. Ground floor shopping mall rents fell 0.7% q-o-q to RMB 18.7 per sq. m. per day, representing declines of 0.7% q-o-q and 1.3% y-o-y.

Logistics

Business activity continued to be heavily impacted by the pandemic as evidenced by weak PMIs, export growth and parcel delivery volume. Warehouse demand contracted by 44% y-o-y and 19% q-o-q to 1.4 million sq. m. Short-term leases from year-end promotions led to a higher volume of early surrenders, while several cities saw lease withdrawals by 3PLs and e-commerce platforms. New stock increased 30% q-o-q to 3.2 million sq. m. National vacancy rose to 18.2% in Q4 2022, while rents contracted by -0.4% q-o-q.

Investment

Commercial real estate investment volume totalled RMB 63.9 billion in Q4 2022, an increase of 32% q-o-q but a decline of 15% y-o-y. Full-year transaction volume reached RMB 219 billion, a drop of 22% y-o-y but nevertheless an improvement over 2020. Activity involving “new economy” assets cooled slightly over the quarter.