Locals driving demand for top office space

DOMESTIC companies have outperformed their overseas counterparts in the level of demand for Grade A office buildings in Shanghai, international real estate consultancy CBRE said in its latest report.

During the 12 months through June, leasing area by domestic tenants in the city’s Grade A office buildings accounted for 54 percent of the total, compared to 45 percent a year earlier.

The report tracks some 12.7 million square meters of high-quality office space, spanning nearly 600 buildings in 16 office clusters and eight business parks around the city.

“The area of Grade A office space leased by domestic tenants has increased rapidly and surpassed overseas tenants for the first time since 2015 when we began tracking such data,” said Ariel Lee, a manager at CBRE Research. “In business parks particularly, domestic tenants took the lion’s share of 69 percent.”

In major office clusters on Nanjing Road W., Huaihai Road M. and People’s Square, foreign tenants continued to drive demand for Grade A space, with more than 60 percent. For business parks, Zhangjiang, Linkong and Caohejing were the most popular among overseas companies seeking high-quality office space, according to CBRE data.

In terms of tenant type, the financial sector, which took 33 percent of total leasing space, remains the largest driver of demand in the major office clusters. In business parks, however, technology, media and telecoms firms outnumbered any other industry at 22 percent.

Almost half the tenants in the city’s major office clusters demand an entire floor, while 58 percent of tenants at major business parks require office space of 10,000 square meters and above.

During the seven quarters through September, a total of 2.75 million square meters of Grade A office space was released onto the local market, equivalent to 32 percent of the city’s total stock prior to 2017, CBRE said.