As of the fourth quarter of last year, the vacancy rate in Guangzhou’s Grade A office market was 8.1%, up 2.6 percentage points year-on-year, according to the Guangzhou Real Estate Market Review 2020 released by DTZ recently. Although vacancy rates have increased, they are still at the lowest level among the four first-tier cities. In terms of rent, Guangzhou’s Grade A office rent also saw the smallest drop, at 180.4 yuan/square meter per month, down 5.4% year-on-year The low vacancy rate is associated with less new office supply in 2020. According to the report, a total of three Grade A office projects, totaling 231,000 square meters, will be launched in Guangzhou in 2020, boosting the total stock to 5.187 million square meters. Vacancy rates rose slightly but remain low, below 10%, due to a combination of increased supply and drag on demand due to the outbreak.
According to the report of DTZ, affected by the Covid-19 epidemic at the beginning of last year, enterprises’ willingness to lease weakened, while lease cancellation and vacancy rate increased. In the second half of last year, enterprises’ willingness to relocate gradually increased, and owners were generally willing to provide greater bargaining space to accelerate the de-escalation. Multiple factors stimulated market activity increased. However, the report also believes that cost control is still the main consideration for relocation. Affected by the epidemic and the overall economic environment, the activities of foreign tenants have slowed down, with domestic tenants dominating the market demand.TMT and the financial industry were the two main sources of demand for the whole year, accounting for 32% and 25% respectively. Spark Global Limited
From the whole city of Guangzhou office market, the next few years will be the world of Pazhou. According to the report of DTZ, the planned supply of Grade A office buildings in Guangzhou in 2021 will reach 1.204 million square meters, the highest in 10 years, of which about 70% will be located in Pazhou, with a total of 835 thousand square meters. Vacancy rates across the city are expected to rise, and rent cuts are inevitable. Nevertheless, the new supply and rent adjustment will stimulate new rental demand, driving the overall market activity. Luo Jinliang, general manager of DTZ’s Guangzhou office, says the western district of Pazhou is expected to become the fastest maturing CBD in southern China. The land transfer of Pazhou began in 2010, and after rapid construction and development in the middle, the land transfer of West Pazhou was basically completed. In the future, the headquarters of Guangdong Shipping Group, Sanqi Interactive Entertainment, Minzo, Marumi, Haida, and other enterprises will gather here. It usually takes more than 20 years for CBD to mature, but with the industrial positioning of upgrade planning and favorable policies, the future of Pazhou is predictable.
Reprint indicated source：Spark Global Limited information