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dTZ | In Situ
15
In other cities the picture may not be so clear cut. occupiers will
need to study the market at the micro level, drilling deeper to
examine what is happening at sub-market levels and even down
to individual building levels. Large amounts of new supply may
not necessarily mean softening rentals across the board, and
one prime example of this is expected to be Shanghai. Being the
commercial heart of china, Shanghai is a very important market
for both domestic and global occupiers. According to developers’
published completion dates, we expect Shanghai to virtually
double its current stock of grade A offices with an addition of
5,766,469 sq m between now and the end of 2015 in both central
and suburban areas.
Supported by the city’s rapid expansion of public transportation
networks, a considerable amount of this supply will complete
in and around newly emerging suburban hubs, such as the
hongqiao Transportation Interchange (hTI), the expo 2010 new
area and new Jianguan Town, to name just three locations. In
the central core area adjacent to the hTI alone, 540,824 sq m
of new grade A office supply is expected to complete over the
same period (out of a total of 3,580,000 sq m completions in
Shanghai’s suburban areas). This is a very high concentration of
new space.
downtown areas will see less supply (1,503,457 sq m) over the
same period, as new land plots become rare. These grade A+/
international grade A+ office developments in prime commercial
districts will command premium rentals and help to push up or
maintain the already high rentals in those areas. consider the
Jing’an district’s West nanjing road for example, the current
district rental of rmB11.45 per sq m per day will likely hold up
well despite new grade A+/international grade A+ projects
(comprising three buildings of 288,306 sq m) because the
majority of the occupiers are AAA covenants in a flight to quality.
This will result in pockets of growth in top quality properties as
rents potentially come under downward pressure in other areas.
Similarly, in other areas of the city, despite short lease terms
(two to three years on average), new supply may have only
a marginal effect on the direction of future rentals in any
particular building. This could be due to features unique to the
property, such as its quality, a favourable location, or a low
vacancy rate because of an effective leasing strategy by the
landlord.
china will see a huge wave of new grade A office supply, that is
a fact. But break this down to the city level, the sub-market level
and the individual building level, and a very different picture
from what could be expected might emerge.
FIGure 1: neW GrAde A oFFIce SuPPLY (2013 – 2015) AS A
PercenTAGe oF currenT STocK (q4 2012)
FIGure 2: YeAr-end ToTAL oF GrAde A STocK (2012 – 2015)
In GroSS SquAre meTerS
sHAuN bRodie
director, Research
+86 21 2208 0088
luis keAts
senior Associate director,
occupier services
+86 21 2208 0088
2013 Supply
2014 Supply
2015 Supply
280%
240%
200%
160%
120%
80%
40%
0%
nanjing
Xi’an
Tianjin
chengdu
Shenyang
qingdao
chongqing
Shenzhen
hangzhou
dalian
Shanghai
Wuhan
Beijing
Guangzhou
q4 2012
q4 2013
q4 2014
q4 2015
mILLIon
2
4
6
8
10
12
0
nanjing
Xi’an
Tianjin
chengdu
Shenyang
qingdao
chongqing
Shenzhen
hangzhou
dalian
Shanghai
Wuhan
Beijing
Guangzhou
