In the past few years, beijing has jumped to one of the most expensive cities in the asia-pacific region for the rent of writing buildings. According to a study by taiping davis, the asia-pacific region marker property survey, the beijing building rental level is third in the asia-pacific region, after hong kong and tokyo. In particular, the cbd region is the largest regional market in beijing for the a-led building, and the average rent is the second highest in the city after the financial street. However, according to the study by taipei davis, with the construction of the midget block project on its way into the market, the cbd region is about to see a huge market supply of first class buildings. While many of the world's most well-known tncs and home-grown firms have chosen to settle in the cbd, the potential large supply is likely to increase the overall vacancy rate of the cbd, which will also have a significant disincentive on rent prices。
Increased vacancy rate for level-i writing buildings
In recent days, research institutions have released data showing that the market for the first class building in beijing has also encountered bottlenecks after years of rent increases and vacancy rates have fallen. With the arrival of a large number of new writing buildings, the vacancy rate for the beijing-class a building began to increase and rental prices were under downward pressure。
The data show that the total market stock of the beijing building currently stands at 1,0436,000 square metres. The new supply pulls the city-wide "a" writing building by a 0. 7 percentage point increase in the vacancy rate. However, the demand for the five core business circles, finance street, cbd, yonsha, east two circles, and middle guan villages continued to be strong, with vacancy rates declining by 0. 6 percentage points to 2. 9 per cent, the lowest in almost two years。
Research institution analysts believe that the increase in vacancy rates is due mainly to the entry of several writing buildings. New technology centres, such as the new technology centre located at the beijing-dinosaur bridge business circle, and the jinh quan building in the reza financial business zone, the jia finance building and the seaiya building all entered the city as scheduled this quarter, bringing about 380,000 square metres of additional supplies to the beijing a building market。
This is only the beginning, as a result of the planning and construction of the cbd intermediate plots, the number of new a-class buildings to be added to the cbd in the future is significant and the inventory pressure is greatest。
16 additional a-words in the cbd core area alone. Building
According to the report of toppen davis, over the next five to six years, as a more mature writing building market, the cbd will usher in a large number of new projects and most will be concentrated in the next four years. There are currently 18 cbd level a writing buildings under construction or planning, of which 16 are located in the core of the cbd, which will become the financial and professional service enterprise headquarters cluster. These new projects are expected to result in approximately 2 million square metres of office space for the writing building market, and the stock will double on the existing basis。
According to the first taiping davis research and consulting department, the new project will be phased in in two batches: most of the first projects completed were concentrated in the northern part of the core area, including the samsung building, the centre, the china life finance centre and china zhuang, which will be delivered and put into operation in 2018-2019. The project in the south, the second supply, will be completed after 2020。
The emergence of the core zone will have a huge impact on the current configuration of the cbd — it is expected that the starting point for the rejuvenation of the cbd will come from the rise of the cbd, which will lead to a significant increase in the overall level of the market for the cbd writing building, which will bring more new companies, new facilities and, of course, more pressure on traffic in the cbd region。
C. B. D. Area rental decline
Whereas rents in the cbd region have been rising steadily in the past owing to limited intraregional supply and strong demand, rent prices have now been relaxed with the huge potential supply in the cbd region. Some of the more cost-sensitive tenants have even opted for relocation to new business areas where rents are more affordable。
As a result, by the end of 2017, the vacancy rate for the cbd had risen from its previous low (1. 5 per cent) to 3. 4 per cent. In order to digest empty space as soon as possible, data from taiping davis indicate that the owner has begun to adjust the lease strategy and that the average rent of the cbd has been reduced from rmb 382 per square metre per month to rmb 375 per square metre per month in the fourth quarter of 2017。
This is only the beginning, and it is expected that 40 per cent of the new level-a building in the core area of the cbd will be self-utilized, based on the latest information from the developers. The report of the first temperance davis projects that by 2019 the overall vacancy rate for the cbd will have reached 17 per cent, the highest in the last eight years, based on normal market conditions and a 40 per cent self-employed assumption; at the same time, average rents have begun to decline gradually and are expected to fall by 12 per cent in 2020 compared to 2017. However, based on market precedents, the actual self-service ratio is often lower than the developer's estimate. If the rate of self-utilisation is less than 40 per cent and more space is put into the market, it will further increase the vacancy rate of the cbd and the decline in rent will become more pronounced。
Of course, the cbd remains the central business area in beijing. The large additional supply of chinese plots has also led to a large number of centralized contracts. Li, the senior manager of the first taiping davis research and advisory department, would like to inform the north qing press that there are now known to include 15,000 square metres of commercial space contracted by yingxi law firms, as well as large and undisclosed businesses negotiating large rents. With the future ownership of some enterprises, it is believed that the business climate in the cbd region has become stronger with the entry of writing buildings into the market. However, given the large supply, while the cbd region will mature in the long term, it will still have a significant disincentive to rent in the core area of the cbd in the short term。
Also a commercial property research institute, the analysis of the deed leung bank is more optimistic, as they argue that the decline in rents in parts of the region, such as the cbd, is offset by further increases in the rents of the financial streets, the middle-banking areas, and the gradually mature non-core business areas of tokyo and yao。
The overall rent on the beijing a-lands market has been increased slightly this quarter and the city-wide writing building is effectively net this represents an increase of 0. 8 per cent per square metre per month. Among them, the kyoyo-yin fungbashi business circle showed a remarkable decline from 35. 4 per cent in the previous quarter to a vacancy rate of 7. 4 percentage points to 28. 0 per cent, with quarterly net intakes of 130,000 square metres, a record high。
However, ken zhikun, director of research and consulting of the north bank of deed leung, also agreed that there might be downward pressure on the rental price of the writing building in the future: “the rent in the writing building market will remain stable in the short term, but the rent will continue to be subject to downward pressure in the long term with the coming supply peak.”
At the same time, he stressed that with the emergence of intellectual, humanistic office ideas, the traditional writing building space would face an innovative upgrading. On the one hand, the owner has focused more on increasing the ease and comfort of office space. On the other hand, in the face of high rent levels, tenants will further pursue space utilization and flexibility。
