Yuan

China Daily (Canada) - - SHANGHAI -

the cost per sq m of grade A of­fices in Shang­hai’s core busi­ness area af­ter the P2P ten­ant ex­o­dus

Road, Jing’an, Peo­ple’s Square and Huai­hai Road will be di­luted to ease the soar­ing rents.”

Zhang added that most of the sup­ply can be found in de­cen­tral­ized ar­eas such as Hongqiao CBD, which is ex­pected to pro­vide an ad­di­tional 92,000 sq m of of­fice space this year, and an­other 66,400 sq m in 2018.

The Hongqiao CBD’s va­cancy rate spiked to 21.5 per­cent from Jan­uary to June and could con­tinue to in­crease. Sim­i­larly, the for­mer 2010 Shang­hai Expo site of Qiantan is pro­jected to have an ad­di­tional 155,740 sq m in 2018 alone.

Look­ing ahead and past the next two years, in­dus­try ex­perts said that Shang­hai’s drive to be­come a mul­ti­fac­eted hub for fi­nance, trade, ship­ping, re­search and cul­ture by 2040 will only at­tract more in­di­vid­u­als to the city to work, in turn eas­ing over­sup­ply.

Com­pared to tra­di­tional of­fice zones, newly de­vel­oped ar­eas of­ten have to spend years jostling for the at­ten­tion of po­ten­tial ten­ants due to their un­der­de­vel­oped fa­cil­i­ties, in­fra­struc­ture and trans­porta­tion net­work. But they are not with­out ben­e­fits.

“These de­cen­tral­ized of­fice ar­eas do of­fer a good deal for cor­po­ra­tions look­ing to buy an en­tire build­ing as their re­gional or global head­quar­ters,” said Lau.

“Also, the large sup­ply of of­fice space and the sta­ble rates in these de­cen­tral­ized ar­eas make them the ideal lo­ca­tion for com­pa­nies with man­u­fac­tur­ing di­vi­sions,” he added.

Pro­fes­sional of­fice devel­op­ers for of­fice spa­ces in de­cen­tral­ized ar­eas have been ad­vised to be proac­tive in plan­ning, po­si­tion­ing and mar­ket­ing their of­fice build­ings to po­ten­tial clients.

Zhang sug­gested that devel­op­ers strive to dif­fer­en­ti­ate them­selves from com­peti­tors by of­fer­ing in­cen­tives such as shut­tle bus ser­vices, metro sta­tions, laun­dry rooms, in­build­ing din­ing fa­cil­i­ties as well as gyms.

Due to the ris­ing pop­u­la­tion of star­tups as a re­sult of the city’s drive to be­come an global hub for tech­nol­ogy and in­no­va­tion, many en­trepreneurs have cho­sen to set up their com­pa­nies in more flex­i­ble shared of­fice en­vi­ron­ments in­stead of tra­di­tional of­fice spa­ces.

How­ever, ex­perts are not wor­ried that such a trend will ad­versely im­pact the of­fice rental in­dus­try.

“Be­fore this trend took place, peo­ple were al­ready us­ing co-work­ing spa­ces in the form of busi­ness cen­ters,” said Lau.

“I don’t see how the tra­di­tional of­fice mar­ket will be af­fected by the de­vel­op­ment of the shared of­fice con­cept — they serve to­tally dif­fer­ent clients: the for­mer of­fers ser­vice to ma­ture en­ter­prises, while the lat­ter is tar­geted at young and high-tech busi­ness star­tups who re­quire more flex­i­ble en­vi­ron­ments. Be­sides, star­tups could even­tu­ally be­come a pre­mium client for tra­di­tional of­fice build­ings.”

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