Demand for office space in Beijing has fallen a;s China’s economy weakens and companies are becoming more conservative about expansion. According to Caixin.com, the vacancy rate for Beijing office space has hit a 13-year high of 20.4%. This is the first time in recent years that the rate has topped 20%.
The shrinking technology industry in Beijing, coupled with conservative growth strategies and cost-cutting measures adopted by companies facing stiff economic headwinds, have combined to dampen office rental demand. According to the Caixin report, the high office vacancy rate in Beijing is mainly attributable to the following factors:
- companies relocating their headquarters out of Beijing over the past year,
- downsizing and taking less rental space, and
- an overall lack of new demand to replace surrendered office space.
The market will likely face further challenges until broader economic growth rebounds. Not only are vacancy rates high, but rents have also fallen. Beijing’s office real estate market is highly dependent on state-owned enterprises, whose long-term tenancy have played an important role in stabilizing the local office rental market.
Source: Radio Free Asia, January 26, 2024