Beijing office market under the epidemic situation: vacancy rate reaches a new high in recent ten years

 Beijing office market under the epidemic situation: vacancy rate reaches a new high in recent ten years

Affected by economic slowdown and other factors, Beijing office market demand has been sluggish since last year. According to CBRE CBRE CBRE CBRE, the net absorption of Beijings high-quality office market in 2019 was only 121000 square meters, the lowest in the past five years. Among them, the market performance of Grade A office buildings is relatively stable, and the net absorption of grade B office buildings with slightly poor quality is - 96000 square meters, a record low.

Under the dual pressure of the peak supply and the lack of new rental power, the rent of office buildings in Beijing fell by 1.4% last year, the biggest drop since 2010, of which the decline in Grade B market was 2.1%.

In 2020, novel coronavirus pneumonia was temporarily delayed in the market due to the new crown pneumonia epidemic. But demand is also affected. According to a number of institutions, in the first quarter of this year, the demand for new rental in Beijings office building market was postponed or temporarily stagnated, and the phenomenon of area reduction and rent cancellation of tenants in exhibition, entertainment, trade and other industries was more obvious.

According to CBRE, the vacancy rate of Beijings office market was 14.5% in the first quarter of this year.

By the second quarter of this year, the previous backlog of rental demand began to seek release, and the rental demand of the office market rebounded. However, as the supply scale of the new deal is still large, the vacancy rate has further increased and the rent has also declined. According to the statistics of the above institutions, the average rent of Beijing office market in the second quarter was 420.5 yuan / m2 / month, down 1.2% month on month.

Zhang siliang, director of commercial real estate department of Jones Lang LaSalle in Beijing, said that under the special background of the impact of the epidemic, office owners pay more attention to the rental rate than to pursue rent growth. Therefore, office buildings tend to attract tenants by reducing prices.

In terms of industry, in the current office market, the science and technology industry is more active, especially the online education and game enterprises are showing a positive trend of rent expansion; the demand for upgrading, relocation and rent expansion of pharmaceutical enterprises is also more significant.

From the perspective of capital type, domestic enterprises are still the main force in the market. According to Jones Lang LaSalles statistics, domestic enterprises accounted for 71% of the newly increased demand for Grade A office buildings in Beijing in the second quarter. Foreign tenants are more cautious due to stricter budget and cost control.

The shop market is also affected by the epidemic. Statistics from several institutions show that the vacancy rate of retail shops in Beijing has increased since this year, and the rent has fallen. Among them, catering, maternal and infant, education, leisure and entertainment are greatly affected.

Its going to take time for the full recovery

Due to the repeated outbreaks in the second quarter, the transaction of Beijings office and shop markets has been at a low ebb. However, analysts pointed out that although the epidemic has been basically controlled, the long-term impact can not be ignored.

The person in charge of an office building in CBD area disclosed to the 21st century economic report that the recent rent situation is not ideal, and the intended customers are obviously less than in previous years. He said that in 2019, the project has been difficult to rent, the specific reasons may be the economic restructuring, the decline in growth rate, and the reduction of foreign enterprises investment in China.

Zhu Yumin, director of Laifang and director of Beijing office building service department, said that the epidemic situation in foreign countries was still spreading, and the uncertainty of the future economic situation was increasing, and the overall market demand continued to be suppressed. Therefore, it is expected that the market of Grade A office buildings in Beijing will still face a more severe situation in the second half of the year. The rent will be under pressure and the vacancy rate will continue to rise.

Zhang Jisu, consultant of CBRE global Huabei district, also believes that the repeated uncertainty of the epidemic situation and the pressure of operating costs this year restrict the release of market demand for office buildings. At present, both tenants and owners focus on the renewal negotiation. It is expected that the phenomenon of rent reduction will continue, and the future office market rent level will decline, thus stimulating the rise of lease transactions.

In the shop market, due to the small capital scale of many tenants and poor risk resistance ability, the phenomenon of shop closing in the early stage is more obvious. Even after the end of the epidemic, the recovery of demand is relatively slow.

In addition, the recovery of industrial logistics real estate and high-end hotels is also considered to be a slow process.

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