Rental surge reflects commercial boom
Rents at grade A office buildings in Wuhan's business districts grew strongly in the second quarter, thanks to increasing demand from the commercial sector, especially multinational corporations.
'As the demand for prime office space has continued to outstrip supply, prime office rents in Wuhan have experienced their sixth straight quarterly rise,' says Grace Lee, senior associate director and head of business space department, DTZ Guangzhou. Wuhan has several major business districts, including Jianshe Avenue in Jiangan and Jianghan Road in Hankou. About 60 per cent of grade A office buildings are in the Jianshe Avenue area in Hankou.
Average rents of grade A office buildings surged 13.3 per cent to 72.6 yuan per square metre in the second quarter compared with the first quarter, Lee adds.
'Multinationals have been driving the leasing activity in Wuhan's [central business district]. Many are in finance, professional services, pharmaceutical and insurance.'
An analyst at CBRE Consulting China in Wuhan, Fiona Wang, says the vacancy rate of grade A office buildings in the Jianshe Avenue district fell 6.3 per cent to 20.8 per cent in the second quarter.
Lee says the average monthly rent per square metre at premium grade A buildings is 90 yuan (HK$110). Most buildings in this category are in the Hankou area. They include the New World International Trade Tower, Jian Yin Building, Rui Tong Plaza and Minsheng Bank Building.
'All high-quality office properties in Wuhan's major business districts are fully occupied, except for Minsheng Bank Building, which came on stream in [the second quarter],' Lee adds. The Minsheng Bank Building has 110,000 square metres of prime office space.
Wang believes about 60 per cent, or 64,800 square metres, of office space at Minsheng is still available for lease.
'The third quarter is the slow season in the Wuhan office market,' she says.
'We expect grade A office rentals to maintain a steady growth for the rest of the year.'
Wang estimates about 87,000 square metres of new office supply will be available by the end of the year.