Q2 vacancies at business parks lowest since 2012

Vacancies at business parks in Shanghai fell to their lowest in years in the second quarter of 2021 amid robust market demand, particularly from the medical & health and tech sectors.

During the three-month period ended June, the vacancy rate at local business parks averaged 21.7 percent, the lowest since the third quarter of 2012, global property consultancy Colliers said in its latest first-half market research.

Net absorption, a barometer of demand, totaled 516,000 square meters between January and June, an over 40 percent rise from the previous six-month period. In the second quarter alone, that stood at 295,000 square meters, a quarter-on-quarter increase of 31 percent.

"By tenant type, companies involved in medical & health, software services and integrated circuits demonstrated the strongest upgrading and expansion demand, accounting for 23 percent, 20 percent and 13 percent, respectively, of the total net absorption during the period," said Kevin Yuan, director of research at Colliers East China. 

"We expect the momentum to extend through the coming months, with full-year net absorption jumping more than 60 percent from 2020."

Average rents, meanwhile, climbed 1.8 percent from the second half of 2020 to 3.83 yuan (59 US cents) per square meter per day, with mixed performances in core and emerging submarkets, Colliers data showed.

For the second half, close to 400,000 square meters of new supply are expected to be introduced across the city, including several high-quality projects in Zhangjiang, Caohejing and Linkong submarkets, international real estate services provider CBRE forecast earlier. That compared with some 413,000 square meters of new space released in the first six months.

"With new supply keeping rolling into the market, tenants' upgrading demand will be further triggered," said Vivi Ding, head of business park, CBRE Eastern China. "For landlords, those who can offer differentiated products and flexible leasing terms will become competitive players in the market."