Although these cities are likely to maintain their leading position
in the technology sector over the short to mid-term, other cities
around China are on heels of Beijing and Shenzhen with respect
to their ability to attract technology companies. Over recent
years, technology companies, in making their China head office
location decisions, have increasingly been pursuing a strategy of
trying to drive growth at ever-lower overhead costs. With regard
to real estate footprint, this means seeking out locations which
have favourable business policies and tax incentives provided
by local governments to qualifying technology companies
as well as locations that can provide the right quality office
accommodation at favourably low rental rates.
When taking into account both the earlier roll-out of China
‘Go West’ policies along with the lower office rentals on
offer compared to Tier I and stronger Tier II cities along the
country’s eastern seaboard, cities like Chengdu and Chongqing
offer a clear operational advantage. In recent years, both
cities have capitalised on this by attracting the multinational
technology company operators of the stature of Intel from
eastern seaboard cities.
INTRA-CITY IS WHERE IT IS MOST HAPPENING
When focusing on office leasing locational activity, the real
happening places at the moment are the major Tier 1 markets of
Beijing and Shanghai.
If not located in the main business parks in these cities in rented
or built-to-suit offices, for a long time multinational technology
companies tended to prefer occupying downtown grade A office
space, and tended to place only a portion of their operations in
rented or built-to-suit business park office premises.
Today, however, the landscape is changing. Currently, we are
seeing a number of quality offices for lease, and even campus
style offices, being built out in the suburban and business park
areas of both Beijing and Shanghai – offices which are very
similar to the type which technology companies generally
occupy in their home markets. Just taking Shanghai as an
example, we are seeing a multitude of this type of space built
or in the process of being built in the western area close to the
Hongqiao Transportation Hub in Lingkong and in Caohejing; in
the south in Zhizhu National Hi-tech Zone; in the north in New
Jiangwan Town; and in the east in Zhangjiang Hi-tech Park, and
in particular SPSP.
With many technology companies dramatically expanding
their headcounts, many of those that are currently located in
downtown grade A offices are now choosing to relocate to the
suburbs whenever the opportunity arises. Doing this, they are
able to take advantage of the lower rental rates available in
decentralised locations. For example, quality grade A+ downtown
office space in Shanghai presently averages around RMB 13.30
per sq m per day, whereas business park offices now average
around RMB 3.45 per sq m per day while quality suburban office
accommodation averages around RMB 5.41 per sq m per day.
When relocating to quality suburban/business park/campus style
offices, technology companies are better able to secure space
which provides them with the following kind of flexibility:
•
To more easily expand their office footprint in the future
•
To house all their business functions under one roof from
corporate to HR, to product development to sales and
marketing to name a few
The technology
sector in China
Decentralising in a
growth market
In China, Beijing is home to 9 out of the top 10 foreign technology firms by market capitalisation. This
is both due to the city’s status as the national capital and also because Beijing is home to China’s most
important technology parks, such as Zhongguancun. Shenzhen, on the other hand, is a popular choice for
top domestic technology firms when it comes to selecting the location of their China/global head office.
28 DTZ | In Situ
