What’s new: More office space is going vacant in South China tech hub Shenzhen, industry data show, with analysts pointing to declining demand from small and midsize firms worried about the impact of country’s new wave of Covid-19 outbreaks.
By the end of March, about 77.8% of Class A office space in Shenzhen was leased, a decline of 2.9 percentage points from the end of last year, according to data from Cushman & Wakefield, a real estate services firm. Net leasing of Class A office buildings — new leases minus expiring leases, as measured by floor space — was down 28.5% year-on-year.
Class A space is considered to be of the highest quality, followed by Class B and Class C.
“We found that some midsize enterprises have chosen to reduce their leased space due to concerns about costs and uncertain expectations for their business; some small firms have suspended leasing plans due to concerns about the virus outbreak dampening business growth,” Zhang Xiaorui, senior director of Cushman & Wakefield’s South China branch, told Caixin.
The context: In March, Shenzhen went through a one-week lockdown to contain a local outbreak of the omicron variant. Strict lockdowns in China’s wealthy cities like Shanghai and Shenzhen have raised concerns about disruptions to supply chains, reduced consumer spending and mounting downward pressure on the economy.
Apart from office space, the housing market has also been sluggish despite some local governments’ policy easing measures. Sales of China’s top 50 property developers declined 47% in the first quarter from a year earlier.
Related: Chinese Homebuyers Shun Market Despite Government Revival Efforts
Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)
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