China office developers offer sweeteners, lower rents to lure tenants

Chinese commercial property developers are seeking to lure tenants with value-added services such as subsidies for charging electric vehicles (EVs) in addition to lower rents, as they battle record-high vacancy rates across the country.

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HONG KONG -

Empty offices are increasingly common even in top cities such as the southern tech hub of Shenzhen and commercial capital Shanghai, as the sector grapples with sluggish demand due to corporate cost-cutting and multinational companies shrinking their presence.

Shenzhen reported the highest vacancy rate of 30.6 per cent among the country's four first-tier cities at end-June, according to real estate consultancy Savills, followed by 23.7 per cent in Shanghai, 22.6 per cent in Guangzhou and 19.6 per cent in Beijing, even though working from home is far less common than in many Western markets.

"We expect conditions to remain challenging in the near term, with landlords relying on incentives and flexible lease structures to retain tenants," said Savills Research senior director James MacDonald, citing continued new supply and softer occupier demand in those cities.

Rents for grade-A offices in the four cities have dropped around 20 per cent to 40 per cent since 2020, with those in Beijing declining the most, according to Savills data.