2023-07-10-莱坊-Shenzhen_office_market_report_Q1_2023_6页_1mb

Shenzhen Grade-A Office Market Q1 2023 Summary

Market Overview

• Leasing activity steadily increased in Q1 2023, with net take-up reaching 92,140 sqm primarily driven by the technology industry.
• Average rents declined by 1.2% QoQ to 183.3 RMB/sqm/month, continuing a downward trend since 2018, with cumulative decreases of 14% over three years and 22% over five years.
• Vacancy rates rose by 1.4% QoQ to 20.2%, with Qianhai submarket at 25.4% and other areas showing mixed changes.

Key Data Highlights

• Total new supply in Q1 was 230,000 sqm, putting upward pressure on rents but facing weak demand.
• Major submarkets showed varying trends:
  • Luohu: rent 156.9 RMB/sqm/month, vacancy 20.4%
  • Futian CBD: rent 220.0 RMB/sqm/month, vacancy 12.1%
  • Nanshan High-tech Park: rent 164.5 RMB/sqm/month, vacancy 13.3%
• Investment market saw four transactions totaling RMB597 million, dominated by technology sector buyers.

Outlook and Recommendations

• Q2 2023 outlook suggests leasing demand may stabilize and vacancy rates could bottom out with economic recovery.
• Recommendations for landlords: adopt "price for volume" strategies, reduce rents to attract tenants, and monitor market changes for occupancy adjustment.

Supply and Demand Trends

• Q1 enquiries rebounded across industries, with notable transactions like Narwal leasing 18,000 sqm.
• New supply pipeline indicates continued high development through 2026, potentially leading to ongoing oversupply.
• Rent negotiations favor tenants, advising proactive service adjustments to meet customer needs.

Investment Market

• En bloc transactions totaled RMB597 million in Q1, reflecting moderate investment activity.
• Expected to remain active in the medium term as the economy stabilizes locally.