Lower rents improved occupancy rates in Shanghai’s premium office market as the city reported solid economic growth, but most companies remained cost-conscious amid a cloudy economic outlook and expectations for bigger discounts, according to JLL.
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Discounts attracted corporate tenants in the quarter ended September, prompting relocations from business parks and suburban areas to grade-A office buildings, the property firm said.
“As the rental disparity between grade-A and grade-B properties continued to narrow, cost-driven upgrades have become increasingly common among tenants from different industries,” said Joseph Wang, head of tenant representation for office leasing at JLL Shanghai.
He added that financial services companies and artificial intelligence-related businesses had demonstrated strong leasing demand as they looked to expand in China’s commercial and financial hub.
Average office rent per square metre per day for premium office space in the city’s central business district dropped 5.3 per cent in the third quarter from the preceding three months to 6.6 yuan (93 US cents), JLL data showed.
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The occupancy rate rose to 83.7 per cent, compared with 83.1 per cent in the second quarter.