The latest data shows that in the third quarter of this year, rental prices for Grade A office buildings in Beijing dropped by 4.7% compared to the previous quarter and decreased by 13.5% year-on-year. Rental prices for office buildings in Beijing have been declining for five consecutive years, with a decrease of over 30%. Meanwhile, the vacancy rate in the Beijing office market remains at a historical high of over 20% in the third quarter.
According to news from Caixin on October 14, the latest data released by market institution Knight Frank shows that in the third quarter, rental prices for Grade A office buildings in Beijing decreased by 4.7% compared to the previous quarter, reaching 266.1 yuan per square meter per month.
In Beijing, most office leasing transactions are driven by relocation demand, while the demand for new leases and expansion of office spaces continues to be sluggish. Data from various market institutions indicate that in the third quarter, rental prices for office buildings in Beijing continued to decline, and the vacancy rate slightly increased compared to the previous quarter.
The data shows that office rental prices in Beijing peaked in 2019 and have been falling since then, with Grade A office rents per square meter having dropped by over 30% in the last five years. Knight Frank’s data indicates that in the second quarter of 2019, the effective net rent for Grade A office buildings in Beijing was 396.19 yuan per square meter, and the rental level has since declined by 32.8% to the third quarter of this year.
As Beijing’s office leasing market is typically B2B (business-to-business) oriented, data such as vacancy rates are important indicators of the market demand for office spaces, reflecting the level of business activity and serving as a barometer of regional economic prosperity.
Regarding this, Li Juan, the Managing Director of Colliers International Beijing, told Caixin that “When the vacancy rate remains at a high level of 20%, it is difficult to say that rental prices have bottomed out and stabilized, and there are now signals of an accelerating decline in rents.” Li Juan believes that in the coming year, the office market vacancy rate in Beijing will continue to hover around 20%, requiring more time and patience for supply and demand to reach a new balance.
Yuan Hui, Head of Tenant Representation and Transaction Services for the North China region at CBRE, believes that with new supply entering the market, the vacancy rate in Beijing is expected to slightly increase.