• Finance and TMT (Technology, Media and Telecom) account for 32% and 15%, respectively, of the total Grade A office stock and are increasingly driving up demand, while non-traditional finance and small-sized TMT firms face volatilities. Demand from Business Services companies remain stable. Manufacturing and energy enterprises are decentralizing or downsizing their office sites and will continue to give place to service sector;
  • Foreign companies are major tenants for Grade A office stock, while domestic tenants are catching up and dominating recent leasing activities and expected to be future demand engines;
  • A sector analysis unveils that the rise of domestic tenants relies on the financial sector (44%), and TMT sector (18%). In comparison, demand from foreign tenants is more balanced, with top three sectors representing only 61% of their total leased space;
  • Financial Street (92% leased by financial sector) and Zhongguancun (70% leased by TMT sector), positioned as Beijing’s financial hub and TMT hub, respectively, remain undersupplied and raised rentals. Supply increase in non-core submarkets in 2017 and CBD Core Area in 2018 are expected to exert pressure on neighboring landlords. Meanwhile, strong take-up is expected as result of pent-up demand from historical supply shortage. The market is expected to become more balanced as vacancy rates rise and tenants are presented with more options;
  • A size analysis reveals that large-size occupiers (5,000 sq. m. and above) account for 4% of total number and 31% of total leased space, among which TMT companies (24%) and banks (18%) are the majorities, and insurance companies are catching up.