Substantial expansion by international and domestic corporations has pushed up rents for grade-A office space in Puxi in Shanghai. It has also driven the vacancy rate to its lowest level since 2009, say international real estate consultants.
The vacancy rate of all grade-A office buildings in Puxi's central business district (CBD) stood at 4.9 per cent in the first quarter of this year, down 2 per cent from the fourth quarter of last year, says Anthony Couse, managing director of Jones Lang LaSalle Shanghai. 'The 4.9 per cent vacancy is the lowest in the past two years,' he says. 'The net take-up of office space was 43,000 square metres, compared with 24,000 square metres in the same period last year.'
The CBD in Puxi covers Nanjing West Road, Huaihai Road and People's Square. The total area of grade-A offices available in Puxi is about 2 million square metres this year. An additional 282,000 square metres of office space is expected to become available in Puxi next year.
The average rent for all grade-A offices in Puxi's CBD gained 8.8 per cent to 8.2 yuan (HK$9.8) per square metre per day in the first quarter from the fourth quarter of last year, while rent in premium grade-A buildings was up 11 per cent to 9.7 yuan per square metre per day. The sharp increases are attributable to the strong demand and limited new supply in the district. The submarkets in Puxi are performing at different levels, Couse adds. 'The gap in rents between grade-A and premium grade-A buildings is widening,' he says. 'Jing'an and Luwan are the best-performing districts in Puxi. Average rent in grade-A buildings in Jing'an is 9.4 yuan and that for premium grade-A buildings is 10.4 yuan. In Luwan, it is 8.8 yuan for grade-A buildings and 10.7 yuan for premium grade-A.
'Compared with 2010, rents of grade-A offices in Puxi have increased between 8 per cent and 10 per cent already. It is likely we will see an average 20 per cent annual increase for 2011. For certain premium grade-A buildings, the increase can be in 20 to 25 per cent.'
Premium grade-A buildings in Puxi include Wheelock Square, Plaza 66, Corporate Avenue and Shanghai International Commerce Centre. 'Almost all premium grade-A buildings in Puxi are 100 per cent occupied,' Couse says. 'Occupancy at Plaza 66, K Wah Center and Corporate Avenue is 99 per cent, while Park Place is 98 per cent.'
