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Belfrey Partners quarterly survey, looking at office availability in Shanghai¡¯s city centre; focusing on units between 50-500sqm.
Market overview
The first quarter of 2006, taking in the Spring Festival, was mainly one of consolidation for landlords. Following some steep rent rises across some buildings, rents were broadly seen to stabilise over the quarter. This can mainly be attributed to the holiday effect, with the Spring Festival disrupting the normal quarter. However, we are surprised not to have seen some steeper rent rises being pushed into the market immediately after the holiday. A situation which may have been effected by what appears to be a larger number of smaller and mid-sized units coming onto the market over the period.
Larger Offices
There was no marked increase in the larger units coming onto the market. The 400-500sqm range, saw a net decrease of 3 units over the quarter to 44 in total. This fall was mainly attributed to a decline in the US$0.50-0.60/sqm/day range, with 2 new units priced above US$1.00/sqm/day. At the budget end, there were 4 new units priced under US$0.50/sqm/day. We believe the best value unit is near Huaihai Rd. at 400sqm with a 4m+ ceiling being offered at a rent US$0.65/sqm/day, while on Nanjing Rd there was a 500sqm unit being offered at US$0.49/sqm/day.
Medium Offices
The number of units in the 200-400sqm unit rose to 158 in total, a net change of 17 units on last quarter. Again, the majority of these (68) are priced in the US$0.50-0.70/sqm/day range. This rise in units can be attributed to some 24 units becoming available in the 200-300sqm range, offset by a decline of 7 in the 300-400sqm range. The most interesting opportunities in this size range included a 300sqm unit in a historic building at US$0.50/sqm/day on Fuxing West Rd. with the best value unit probably being a 327sqm office on Weihei Rd. at US$0.50/sqm/day.
Smaller Offices
There was a large increase in small (50-200sqm units) over the period, rising by 54 units to 273 in total. This represents a rather startling 20% rise in units over the quarter, with the majority coming from an increase of 38 in units between 50-150sqm. We don¡¯t have any clear explanation for this figure, we do however believe it is likely to be contributing to the stabilisation of rents, as mentioned earlier. However, the best value units remain those available in a new office tower to the East of Xintiandi.
The rise in availability of smaller units will be welcome news to some tenants. However, despite the apparent support from these numbers, the quality of units remains varied. Particularly with the smaller units, a rise in choice doesn¡¯t guarantee a rise in quality. This means good units continue to rent out quickly and remain relatively hard to find. It should also be noted, despite the quarterly rise in availability, there is little evidence of this exerting any downward pressure on rents. Landlord¡¯s continue to feel full and are negotiating accordingly.
Property of the Month
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Type: |
Office Studio |
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Location: |
Fenyang Rd |
Size: |
400sqm |
Rent: |
US$0.65/m²/day |
Mng fee: |
US$0.10/m²/day |
Monthly: |
US$9,125 |
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