Vacancy Falls on Solid Absorption Cushman & Wakefield Releases the Report 2018 Greater China Top Office Demand Trends
HONG KONG, CHINA – Media OutReach – 3 January 2019 – Cushman & Wakefield (NYSE: CWK), a leading global real estate services firm, today released the report 2018 Greater China Top Office Demand Trends. The eight key city markets covered in this report saw strong demand for office space throughout the past 12 months. In every one of these significant city-level Grade A office markets, the October 2017 to September 2018 time period saw office absorption notably rise on a year-on-year (y-o-y) basis.
Provisional on market level supply/demand dynamics in our eight tracked key cities (together with the location and quality of newly completed supply), a diverse picture will persist. As witnessed during the preceding year, vacancy will likely fall in some cities, but could rise in others. An analogous picture should transpire for city-level rental rates.
Ahead into 2019, and exclusively focusing on the demand dynamic, we anticipate office absorption to continue to remain solid.
Three of the main sectors — Professional Services, Finance and Technology, Media & Telecommunications (TMT) — are expected to have continued strong demand in 2019. This is especially the case for technology companies as the city is being positioned as a National Technological Innovation Centre;
Hugely benefitting from the Greater Bay Area development framework and other favorable initiatives, Shenzhen is expected to see increasing demand for Grade A office space, which will mainly stem from the Finance and TMT sectors;
The tightening lending policy environment will promote some conservative thinking within the Finance sector. But this will be balanced out by industry reforms, which will promote new business opportunities, which in turn will produce appetite for office expansions from benefitting companies. Meanwhile, the Professional Services and TMT sectors will likely continue to see general business growth. Lastly, Shanghai remains one of the cities much sought after by co-working operators for market share. Having said this, we could also see some further market consolidation among the co-working operators for the year ahead;
Due to a series of favorable policies and initiatives, Guangzhou should continue to realize strong leasing demand from the Finance and TMT sectors, as well as from both international and domestic co-working operators;
Under a tightened policy environment, the office demand in 2019 is expected to come from the Professional Services and TMT sectors. Co-working operators are expected to lessen the rate of expansion after aggressive center growth in the past few months;
Decentralization is a major trend for MNC leasing activity due to tight availability and high rentals in core areas, while co-working operators are actively taking up more Grade A office space in core areas in their chase to gain market share. Looking forward, we expect the same office space demand trends which have touched the city over the past 12 months to continue to impact Hong Kong for the year ahead;
Recently, there has been active leasing activity by companies using Wuhan as a base for their central China regional headquarters. The TMT sector is set to continue another period of strong demand for core and suburban office space in Wuhan over the course of next year;
Relocation and office consolidation by professional services companies, along with innovative technology companies in the TMT sector, are expected to be major demand trends for the Grade A office market during the upcoming year.
Ms Vicky Shen, Senior Director, Head of Office Agency, China, Cushman & Wakefield, said, “From a landlord’s perspective, in a number of markets, the tight availability and subsequent rental rises have been welcomed. However, even within these markets, there are still plenty of leasing opportunities for occupiers, especially in sub-districts with a lot of recent new supply.”
Mr Jonathan Wei, Managing Director, Head of Occupier Services, China, Cushman & Wakefield, said, “In China, our tech sector clients have seen significant headcount growth over the last few years. We don’t see this trend letting up, particularly for those successful unicorn companies.”
Mr Shaun Brodie, Senior Director, Head of Occupier Research in Greater China, Cushman & Wakefield said, “In the future in the Greater China region, we expect users to increasingly view co-working not just as a space solution, but also as an overall product, which takes into consideration space, design, amenities, technology, the community network and services.”
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About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with 48,000 employees in approximately 400 offices and 70 countries. Across Greater China, there are 20 offices servicing the local market. The company won four of the top awards in the Euromoney Survey 2017 & 2018 in the categories of Overall, Agency Letting/Sales, Valuation and Research in China. In 2017, the firm had revenue of $6.9 billion across core services of property, facilities and project management, leasing, capital markets, advisory and other services. To learn more, visit www.cushmanwakefield.com.hk or follow us on LinkedIn (https://www.linkedin.com/company/cushman-&-wakefield-greater-china)