Strong leasing demand lifts rents as office market recovery continues

Shanghai's Grade A office market continued to recover in the third quarter of this year as strong leasing demand further raised rents and reduced vacancy, global property consultancy JLL said in its latest quarterly research.

Around the city, net absorption, a barometer of market demand for office space, totaled 386,000 square meters between July and September, with CBD areas recording some 174,000 square meters and the rest in decentralized markets, according to JLL data.

"Domestic financial service and professional service firms remained active in Lujiazui, while demand in Puxi was mainly driven by sectors including financial service, professional service, retail and TMT (technology, media and telecommunications)," said Neo Huang, head of tenant representative for JLL Shanghai Office Leasing Advisory. "Notably, inquiries from pharmaceutical firms also picked up, especially in the Qiantan submarket."

Overall CBD rents gained at a faster pace, climbing 0.9 percent from the previous three-month period. In Puxi, they edged up 1.8 percent, mainly fuelled by increases in premium buildings, while on the other side of the Huangpu River, rents remained largely unchanged with widening performance gaps between submarkets and individual buildings.

In decentralized locations, overall rents rose 1.3 percent quarter-on-quarter, boosted by strong players including the Qiantan submarket, JLL research found.

Meanwhile, the overall CBD vacancy rate fell 1.7 percentage points quarter-on-quarter to 9.3 percent, with decreases recorded in both Puxi and Pudong. In decentralized areas, however, large amounts of new supply, which totaled 420,000 square meters, pushed vacancy rates up by 1.3 percentage points.

In a separate move, JLL, a nearly three-decade player in the Chinese mainland real estate market, has recently launched "Zhenliang," a commercial real estate valuation and asset management platform.

The country's first digital asset management SaaS (Software as a Service) solution covering all real estate segments is designed to enable industry practitioners to obtain accurate industry data and make full-cycle asset valuations, the company said.