Beijing feels office space crunch as vacancies shrink

Beijing needs more office space to meet its economy's growing reliance on services, a real estate consultancy said.

According to Jones Lang LaSalle, overall vacancies for grade-A office dropped from nearly 30 per cent just after the 2008 Olympics to single digits in mid-2011 and, recently, below 5 per cent, due to strong demand and low stocks of suitable offices.

"It's clear that Beijing needs a bigger workspace supply to support the city's future economic growth," said Julien Zhang, a managing director of Jones Lang LaSalle Northern China and Beijing, as the firm issued a research report yesterday.

The influx to the capital in recent years of firms from multiple sectors, especially services, has left most office buildings fully occupied and vacancy rates very tight elsewhere, the report said.

"The short supply of workspace has become significant as Beijing transforms to an economy dominated by the service sector," said Liu Hongyu, director of Tsinghua University's Real Estate Research Centre.

The capital would take the lead in a new mode of development as the central authorities attached greater importance to greener, more sustainable development than pure growth, he said.

The city has seen the number of service sector employees rise from 6.5 million in 2007 to 8.2 million last year, the report said.