Shenzhen Grade-A Office Market Report - Q1 2021 TMT enterprises were active in the office leasing market - Knight Frank
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TMT enterprises were active in the office leasing market
Shenzhen Grade-A
knightfrank.com.cn
Office Market Report
Q1 2021Shenzhen Grade-a OFFICE MARKET REPORT Q1 2021
LOWERING PRICE TO BOOST
VOLUME WAS STILL AN IMP ORTANT
STR ATEGY FOR MOST OFFICE
L ANDLORDS TO AT TR ACT TENANTS
In Q1, Guangdian Financial Centre was delivered,
bringing 229,000 sqm new supply to the Shenzhen Grade-A office market.
The overall stock increased to 8.23 million sqm.
The fixed asset investment in Shenzhen The Shenzhen Grade-A office leasing projects achieved high occupancy due to
recovered well, and the consumer market market was active in this quarter. the high-quality building specifications,
was picking up fast. From January to Although the negative impact of the well-equipped commercial facilities, and
February 2021, the cumulative growth in epidemic on Shenzhen Grade-A office relatively few supplies in the surrounding
fixed asset investment increased by 46.2% market has been gradually eliminated, it is areas.
YoY while total retail sales of consumer expected that competition in the Shenzhen
goods in Shenzhen increased by 37.6% YoY. Grade-A office market will remain fierce Quality companies were still actively
due to the large amount of new supply seeking opportunities to upgrade or
In Q1 2021, the vacancy rate of the in the future. In the short to medium expand office spaces. The occupancy of
Shenzhen Grade-A office market was 23%, term, most office building developers will many leading companies in emerging
remained the same as previous quarter. continue to bear great pressure on leasing, business districts has also driven their
The average rent of the Shenzhen Grade-A and lowering prices to boost volume will upstream and downstream affiliated
office market fell 1.0% QoQ to RMB 203 be still an important leasing strategy for companies to lease office space in the
per sqm per month, which was a narrower most landlords. Despite the abundant surrounding areas.
decline compared to the previous quarter. new supply, some prominent office
2Shenzhen Grade-a OFFICE MARKET REPORT Q1 2021
Fig 1. Shenzhen Grade-A office market indicators
New Supply Rent Vacany Rate Price
Q1 2021 229,000 sqm RMB 203 / sqm / month 23.0% RMB 50,407 / sqm
QoQ Change 1.0% 0.05%
Forcast
(Q2 2021)
Source: Knight Frank Research
RENTS AND PRICES
In Q1, the average rent for Grade-A office
space in Shenzhen was RMB 203 per sqm Fig 2. Shenzhen Grade-A office rental and price
per month, down 1.0% QoQ and the decline Price Rental
narrowed 0.4 percentage points.
RMB/sqm/month RMB/sqm
In terms of business district, the average rent 260 60,000
in emerging business districts remained 240 55,000
stable during the quarter, while the average 220 50,000
rent in the core and secondary business
200 45,000
districts went down. The average rent of
180 40,000
Grade-A office buildings in the core business
160 35,000
districts decreased by 2.9% QoQ to RMB 212
140 30,000
per sqm per month, while the average rent
120 25,000
of Grade-A office buildings in the secondary
Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1
business districts decreased by 0.8% QoQ to 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
RMB 186 per sqm per month. Source: Knight Frank Research
In the strata-title market, the average price
of office buildings in Shenzhen during the
quarter was RMB 50,407 per sqm, increased
slightly by 0.05% QoQ.
3Shenzhen Grade-a OFFICE MARKET REPORT Q1 2021
Table 1. Major Grade-A office sub-market indicators, Q1 2021
Rent Rent Change Vacancy rate change
Submarket Vacancy Rate
(RMB / sqm / month) (QoQ) (QoQ)
Caiwuwei 185 ↓4.2% 17.6% ↑3.0
Futian CBD 238 ↓1.2% 16.5% ↑3.0
Houhai 211 ↓2.8% 30.9% ↑0.8
Qianhai 156 ↓0.6% 43.7% ↓1.9
Huaqiang North 175 ↔ 25.5% ↓5.2
Chegongmiao 211 ↓2.3% 14.7% ↓2.2
Shekou 193 ↓3.5% 35.7% ↔
Nanyou 165 ↔ 4.4% ↔
High-tech Business Park 179 ↔ 18.9% ↓3.0
Source: Knight Frank Research
S U P P LY A N D D E M A N D
In Q1 2020, Guangdian Financial Centre
was delivered, bringing 229,000 sqm new Fig 3. Shenzhen Grade-A office supply, take up and vacancy rate
supply to the Shenzhen Grade-A office
Grade-A office supply (left) Grade-A office net absorption (left) Vacancy rate (right)
market. The overall stock increased to
'000 sqm
8.23 million sqm, raised 2.9% YoY.
1,600 30%
In this quarter, TMT companies still 1,400
25%
dominated the leasing transactions. 1,200
20%
Notable examples include the lease 1,000
of a 3,100-sqm-office space in Baidu 800 15%
Mansion by TRANSSNET; the expansion 600
10%
of a 1,500-sqm-office space in Neptune 400
Galaxy Technology Building by EXC- 5%
200
LED.
0 0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q1
Source: Knight Frank Research
Table 2. Major Grade-A office leasing transactions, Q1 2021
District Building Tenant Area(sqm) Leasing Type
High-tech
Baidu Mansion TRANSSNET 3,100 New Lease
Business Park
High-tech Neptune Galaxy
EXC-LED 1,500 Expansion
Business Park Technology Building
Source: Knight Frank Research
Note: all transactions are subject to confirmation
4Shenzhen Grade-a OFFICE MARKET REPORT Q1 2021
INVESTMENT MARKET
In March 2021, Shenzhen Expressway stated that the purchase of new office development. In the development
and Shenzhen International jointly properties can meet the office needs environment of Shenzhen’s industry
announced that Shenzhen Expressway of Shenzhen Expressway and its many agglomeration effect and talent
agreed to purchase office properties subsidiaries. gathering effect, it is expected that
from Loren-Sebo with a transaction more cooperate buyers will become the
value of RMB 1.559 billion. The property The rapidly expanding and well-funded major demand side for office en-bloc
is a first-hand office property on 35 to 48 corporate buyers have gradually transaction in the future, thereby
floors of Hanking Financial Center, with become an important demand side enhancing the company’s image and
a transaction area of approximately of the Shenzhen office investment promoting the benefits of corporate
23,000 sqm. Shenzhen Expressway market to meet the needs of their own development.
MARKET OUTLOOK
Starting in 2021, the development of and Technology Innovation Pole, to
Shenzhen’s “headquarters economy” promote integration while stimulate
D r ive n by t he m a c ro p olicy
has been accelerated. On February 22, the construction of a national science
Wumart Southern Technology Co., center; promote the construction of o r i e nt a t i o n, t he i nf l ow of
Ltd. acquired a commercial land in major cooperation platforms among c ap i t a l a nd o t he r f a c tors,
Futian District for RMB 1.257 billion, Guangdong, Hong Kong and Macao,
i t i s exp e c t e d t o e f fe c tively
with a land area of 4,499.95 sqm. After such as Qianhai District, Shenzhen,
the land was acquired, Wumart would Hengqin District, Zhuhai, Nansha p ro m o t e t he d eve l o p ment
sign a headquarter project industry District, Guangzhou, and Shenzhen-
o f p ro fe s s i o na l s e r vices,
development supervision agreement Hong Kong Loop.
with Shenzhen Futian District Industry TMT a nd o t he r i nd u s t ries
and Information Technology Bureau, As an important area of the “Shenzhen i n She nzhe n, c o nfo r ming
promising that the acquired land can Strategy”, Qianhai had a brilliant
only be used for the construction of the performance in attracting foreign direct
t o She nzhe n’s s t r a t eg ic
headquarters for Digital Distribution investment. In 2020, the foreign direct p o s i t i o ni ng , t he re by f u r t her
Supply Chain, Futian District. investment in actual use in Qianhai
p ro m o t i ng t he d eve l o p m ent
Shenzhen-Hong Kong Cooperation Zone
In order to further promote Shenzhen was USD 4.305 billion, an increase of o f She nzhe n o f f i c e l e asing
into a competitive and international 11.7%, accounting for 49.6% of the city
m a r ke t , e sp e c i a l ly the
metropolis, Shenzhen was repeatedly and 3% of the country. There was a total
mentioned in the “The Fourteenth of 11,300 registered Hong Kong-funded d e m a nd s i n Q i a nhai
Five-Year Plan for National Economic enterprises, and the direct investment s u b - m a r ke t .
and Social Development of the People’s in actual use from Hong Kong
Republic of China and the Outline accounted for about 88.3% of the total
of Vision Goals for 2035”, which was foreign investment in Qianhai.
released in March. The outline proposes
to support Shenzhen to become a Driven by the macro policy orientation,
pioneering demonstration zone for the inflow of capital and other factors,
socialism with Chinese characteristics; it is expected to effectively promote the
improve the Guangzhou-Shenzhen- development of professional services,
Hong Kong, Guangzhou-Zhuhai- TMT and other industries in Shenzhen,
Macao Science and Technology conforming to Shenzhen’s strategic
Innovation Corridor, Shenzhen-Hong positioning, thereby further promoting
Kong Loop, and “Two Corridors and the development of Shenzhen office
Two Points” framework system for leasing market, especially the demands
Guangdong-Macao-Hengqin Science in Qianhai sub-market.
5Shenzhen Grade-a OFFICE MARKET REPORT Q1 2021
SHENZHEN GRADE-A office market dashboard
q1 2020
Qianhai High-tech Business Park Chegongmiao Huaqiang North
Rent: 156 Rent: 179 Rent: 211 Rent: 175
VR: 43.7% VR: 18.9% VR: 14.7% VR: 25.5%
Shekou Houhai Nanyou Futian CBD Caiwuwei
Rent: 193 Rent: 211 Rent: 165 Rent: 238 Rent: 185
VR: 35.7% VR: 30.9% VR: 4.4% VR: 16.5% VR: 17.6%
S o u rc e : K n i g h t F ra n k Re s e a rc h
N ote : re n t s u s i n g ave ra g e e f fe c t i ve re n t a t R M B /s q m /d ay ; V R re fe r s t o a ve ra g e va c a n c y ra t e.We like questions, if you’ve got one about our research, or would like some property advice,
we would love to hear from you.
Research & Consultancy Shenzhen Office Services
Laurence Zhu Regina Yang Ken Kan
Senior Director, Director, Head of Research & Consultancy, Managing Director,
Head of Research & Consultancy, China Shanghai & Beijing Head of South China Office Services,Shenzhen
+86 137 6439 9991 +86 21 6032 1728 +86 755 3394 7001
laurence.zhu@cn.knightfrank.com regina.yang@cn.knightfrank.com ken.kan@cn.knightfrank.com
Martin Wong Omega Ou Carol Wu
Director, Head of Research & Consultancy, Analyst, Research & Consultancy, Director, Head of Office Services,
Greater China Guangzhou Shenzhen
+852 2846 7184 +86 20 3877 1477 +86 755 3394 7002
martin.wong@hk.knightfrank.com omega.ou@cn.knightfrank.com carol.wu@cn.knightfrank.com
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