2023-02-15-莱坊-Shanghai_Office_Market_Report_Q4_2022_5页_1mb

Shanghai Grade-A Office Market Report Summary Q4 2022

Overview

In Q4 2022, Shanghai's A-grade office market showed signs of adjustment following pandemic-related restrictions, with a significant increase in new supply and a decline in leasing demand. The market absorbed 99,131 sqm net, down 70% YoY compared to 2021, driven by economic uncertainty, but new supply reached 345,549 sqm. Market vacancy rose to 16.7%, while average rent fell to RMB8.50 per sqm per day, down 0.69% QoQ and 0.02% YoY. Factors such as China's economic recovery and foreign investment inflows are expected to boost the market in 2023.

Key Metrics

• Q4 New Supply: 345,549 sqm (up 48% QoQ)
• Net Absorption: 99,131 sqm (down 41% QoQ)
• Average Rent: RMB8.50/sqm/day
• Vacancy Rate: 16.7% (up 0.8 percentage points QoQ)

Leasing Trends

Leasing demand was predominantly from financial, professional services, and TMT sectors, accounting for about 60% of the market. High-demand submarkets included Nanjing West Road, Little Lujiazui, and Qiantan. Rents dropped overall, but core CBDs like Nanjing West Road and Little Lujiazui saw slight increases YoY due to demand from high-revenue sectors. Landlords pushed rents down to attract cost-conscious tenants.

Supply Dynamics

The market featured new completions such as New Bund Square, Bund Centre T3, and Lai Fung Skyline Centre. Developer focus shifted to upgrading green and technological features to meet tenant demands for sustainability.

Investment Market

Total transaction value was RMB50.6 billion, with foreign investors dominating, especially in high-quality projects. Key investments included acquisitions like Jinko Solar's purchase of T3 Shanghai Hongqiao R&F Centre and AIA's deal in Shanghai Shisen Real Estate. Owner-occupier buyers, drawn by low investment values post-pandemic, remained active in sectors like technology and energy.

Outlook

The market is expected to rebound in 2023 with increasing rents and occupancy, supported by economic recovery and reduced pandemic restrictions. Continued investment in upgrades and diversification into emerging sectors will likely enhance market resilience.