TMT, finance and real estate were the top three demand drivers
Dear Valued Client,
• Affected by a resurgence of Covid and power rationing, Q3 2022 office demand softened, with a total net absorption of 12,900 sq m (138,800 sq ft). This is a 38.1% QOQ and 76.2% YOY decrease. There was no new supply in Q3, and therefore, city wide vacancy dropped 0.3pps QOQ to 22.3%. The largest proportion of newly leased space were the TMT (17.6% of newly leased space), finance (15.8%) and real estate (12.2%) sectors. Due to the softer demand, the average face rent decreased 0.5% QOQ to RMB103.0 (USD14.5) per square meter per month, and the effective rent was RMB97.1 (USD13.7) per square meter per month.
• Competition became fiercer with the disruption from Covid and higher supply. Therefore, we recommend tenants can strive for more favorable terms such as increased rent free periods.