Companies hunt for cheaper rents in Shanghai as weak office market pushes up vacancies
- Large corporate tenants with growing bargaining power are relocating offices to less developed areas as they cut down on rental costs
More companies in Shanghai are chasing new leasing deals to cut down rental costs, as they increasingly relocate offices to less developed areas amid a sluggish office market.
Large corporate tenants, with growing bargaining power, are taking advantage of lower rents to rearrange their workplaces, according to property service firm JLL.
An influx of decentralised office blocks – those outside central business district (CBD) areas – climbed in the second quarter, exerting downward pressure on rents, said Stanley Jiang, senior director for JLL’s Shanghai office leasing division.
“The trend of tenants pursuing new leasing deals in non-CBD areas continued,” he said. “Falling rents have prompted large corporate clients to seize the opportunities to save on rent.”
In the decentralised market, three new office buildings unleashed 220,700 square metres (7,535 sq ft) of space in the three months ended June, intensifying competition among landlords while driving the vacancy rate to 30.1 per cent, up 0.5 percentage points from March. In CBD regions, the average vacancy rate stood at 15.6 per cent last month, up 0.3 percentage points quarter on quarter.
