Rapid expansion by domestic corporations in the finance sector, coupled with the limited supply of grade-A offices, has contributed to rent increases and a decline in vacancies in the commercial property leasing market.
Managing director of Jones Lang LaSalle, Shenyang, Michael Wang, says, grade-A office absorption and transaction rents showed positive quarter-on-quarter growth in the third quarter of this year.
'The average vacancy rate in the market went down to 15.5 per cent, which represented a 5.7 per cent decline from the second quarter,' he says.
Grade-A office rents showed strong momentum for growth. The average monthly rent of the city's grade-A offices was recorded at 92.4 yuan per square metre (based on the net effective rent, gross floor area) in the third quarter.
'It was a 4.2 per cent quarter-on-quarter increase. Compared with the same time in 2010, the increase was 29 per cent,' Wang says.
He attributes the gain in rent to the limited availability of new grade-A office space in the city as well as the strong demand from domestic companies in the financial sector.
'Domestic enterprises account for 75 per cent of total market demand in Shenyang. Financial institutions, including banks and insurance companies, make up the largest proportion, accounting for 40 per cent of overall occupancy.'
Apart from the finance sector, corporations in the information technology sector and those in hi-tech industries have been seeking new offices for expansion.
Together they make up around 24 per cent of total leasing demand. Legal and other professional services providers account for 36 per cent, Wang says.
Shenyang's concentrations of commercial buildings are in Beizhan Road in Shenhe, Heping and Wulihe districts. Premium grade-A office buildings include Fortune Centre Tower E, L-Avenue Building and Fangyuan Mansion.
'Given the persistently strong demand for office space, average rent is expected to sustain the growth momentum for the rest of 2011,' Wang says. 'With new office supply coming on stream, the growth of rents may moderate in 2012.'