Hangzhou's transformation from an industrial economy to one led by information technology and hi-tech enterprises has helped sustain growth in the city's office leasing market.
Office rents maintain their incremental gains, although overall vacancy has increased due to a surge in supply in newly developed districts, according to Andrew Slevin, managing director at CBRE for east China.
Average rent in the overall leasing market was 115.7 yuan (HK$141.3) per square metre in the first quarter of this year, which grew from 111.9 yuan in the corresponding period in 2011. 'Overall vacancy rates stand at 19.2 per cent due to the abundance of recent stock around newer districts such as Qianjiang Xincheng,' Slevin says. 'However, this supply has not lowered overall rents, as occupiers are still inclined to remain in the city's traditional business districts. It will still take some time for amenities in the newer districts to catch up and the real estate cycle to reach its apex.'
Huanglong district is preferred by most multinational corporations and many domestic enterprises. Wulin is considered the official city centre with the largest concentration of state-owned enterprises and retailers. Qingchun is considered the financial district where banks, both domestic and overseas, are located, Slevin says. 'Demand is likely to remain strong throughout the rest of 2012. Even with plentiful new supply, most will be in less developed districts and do little to impact overall office rents until those districts mature and become more attractive for occupiers to consider relocation.'
New commercial complexes to be unveiled in the next few years include Raffles City Hangzhou and Hangzhou MIXC. With its towers' dynamic yet sensuous form, the new mixed-use Raffles City Hangzhou is set to become a landmark in the Qianjiang Xincheng district when it becomes fully operational in 2015. According to a spokesman for developer and proprietor CapitaLand (China) Investment, the total floor area of the complex will be 396,000 square metres, which includes an upscale shopping centre, grade-A office spaces, five-star hotel, serviced apartments and other luxury residential units. A LEED Gold certified project, Raffles City Hangzhou, will have direct access to the city's Subway Line No 4. 'For the Raffles City Hangzhou, world-renowned Netherlands-based architectural firm UNStudio was inspired by the tidal wave of Qiantang River and designed the project's expression of the curvy, undulating lines,' the spokesman says.
Approximately 70,000 square metres of grade-A office space will be available with various floor plate sizes to accommodate tenants' needs, the spokesman says.
Around 80,000 square metres of grade-A office spaces at Hangzhou MIXC will be ready for rental in 2014, according to China Resources (Holdings), which jointly develops the project with Sun Hung Kai Properties. The office tower is called MT Tower, which has 31 stories and whose offices feature 15cm raised floors for cables and lines. The MT Tower has already received the pre-certification of LEED Gold.
A mixed-use commercial, residential and hotel complex, Hangzhou MIXC has a total floor area of 800,000 square metres. It is located at the junction of Qingchun East Road and Qianjiang Road. The natural landscape-inspired architectural concept features several towers surrounding the central shopping centre like mountains.