First-tier cities in China drive demand for office space
The supply gap for Grade A and B office space will exceed 30 million square meters in China's four first-tier cities, where market size already surpassed 10 million square meters each, JLL's latest office market research found.
The potential demand for Grade A and B offices is around 40 million square meters in Beijing and Shanghai, and 20 million square meters in Guangzhou and Shenzhen, the global property consultancy predicted, based on its latest comprehensive study covering nearly 5,000 office building projects across over 200 Chinese cities.
"China's office market demand is primarily driven by its leading cities, with the top 10 players boasting a total potential demand that exceeds that of its over 200 lower-tier counterparts combined," said Mi Yang, head of research for North China at JLL.
China's current office market is vastly different from city to city in terms of development, volume and rent pricing.
Beijing, Shanghai, Guangzhou and Shenzhen, for instance, are the only four cities in which the market has reached maturity, having an established stock of more than 10 million square meters of space. In sharp contrast, about 70 percent of Chinese mainland cities are still at the startup stage, and more than 60 percent of Chinese mainland cities have less than 500,000 square meters of office space, according to JLL, which defines the other two stages between startup and maturity as the construction and development stages.
As for rent, offices in first-tier cities averaged above 5 yuan (77 US cents) per square meter per day whereas more than 30 percent of lower-tier cities recorded an average rent of less than 1 yuan per square meter per day, JLL data showed.
On a global scale, Beijing and Shanghai are the only two Chinese mainland cities among the world's top 50 cities with the highest office rent prices, ranking third and 14th, respectively.