SHANGHAI’S Grade A office rents climbed more slowly on both sides of the Huangpu River in the second quarter of this year, and the city is set to see vacancy rates rise amid an abundance of new supply in the second half, major global property consultants said in their latest reports.
Grade A office rents edged up 0.6 percent from the first quarter to 9.90 yuan (US$1.48) per square meter per day in Puxi between April and June, the slowest pace recorded in the past six quarters, according to JLL’s quarterly market report.
Rents in Pudong rose 1.1 percent quarter on quarter to 11.40 yuan per square meter per day during the same period, also slowing from the 1.7 percent growth in the first three months of 2016.
“While domestic finance companies and multinational retailers continued to be active in the CBD areas, strong rental growth over the past year has led some tenants to consider less expensive options in decentralized markets,” said Eddie Ng, managing director for JLL East China. “This process is creating opportunities for landlords in sub-markets near the CBD such as the railway station and the North Bund areas.”
Nearly 600,000 square meters of new supply are set for Shanghai’s core office market over six months through December.
“As a consequence of the new supply, vacancy rates in all areas of the city are expected to increase, although the rise is Puxi will be greater than in Pudong,” said Chester Zhang, associate director at Savills China Research.