Beijing’s squeezed office space
It’s five years since the Beijing Olympics, which did much to showcase the city’s rapid economic growth, as well as the transformation it and its real estate.
The Chinese capital is the country’s second biggest city after Shanghai, with a population of just over 20 million in 2011. It ranks among the top five global cities where dollar billionaires reside, and is the city with the most global company headquarters.
Around the time of the Olympics, visitors remarked that Beijing seemed to have a lot of empty office space, and with planners intending to further increase capacity, there were questions raised over whether it would be filled. Indeed, vacancies for grade-A office space stood at nearly 30 per cent just after the 2008 Olympics.
However, research from Jones Lang LaSalle shows that despite major construction, vacancies in grade-A office space fell sharply to a single-digit level by mid-2011 before reaching 4.4 per cent now.
“It’s clear that Beijing needs a bigger workspace supply to support the city’s future economic growth,” said Julien Zhang, managing director of Jones Lang LaSalle in northern China and Beijing.
One of the reasons behind the growth in office demand in Beijing is the rise in the number of services-sector employees, from 6.5 million in 2007 to an estimated 8.2 million in 2012.
Increased deregulation will see significant growth in workspace demand in the city’s financial and services sectors, especially as businesses try to stay close to the central government and other regulatory bodies, all based in Beijing.
Jones Lang LaSalle predicts Beijing’s city office stock, combining Grade A and Grade B, will grow by 3.1 million sq m between end-2012 and end-2017, and when added to the business park supply numbers, Beijing’s total commercial workspace will post a compound annual growth rate of 6 per cent to the end of 2017.
“This rate, when compared with an expected economic growth of 7 per cent per annum, does not suggest a high risk of oversupply, if any,” said Mr Zhang.