Rent an office and give an iPhone?
Xu Qing, who works at Beijing International Trade Center, has recently felt that there are significantly more people who come to sell office rentals, and the rent reduction is really not small. The monthly rent of many offices dropped by 2,000 yuan or 3,000 yuan, and once dropped by nearly 20%. But what attracted her the most was the line on the leaflet, "If the contract is successful, you will get an iPhone".
She couldn't help but sigh, in order to get the customer to sign the contract, the landlord is so hard?
Behind the opening of office buildings is the increase in vacancy rate. According to data, the vacancy rate of Grade A office buildings in Beijing, Shanghai, Guangzhou and Shenzhen has climbed to a new high in the past three years. Xu Qing also noticed that many companies in her office building had moved away, and the elevator was not so crowded during rush hour.
The lights are turned on at about 5:30 p.m. on a working day in a certain area of Jianwai SOHO in Beijing. Figure provided by the interviewee.
Why are office rents falling? Isn't office rental good business?
The rent reduction is ferocious
The office rent is cut in half and customized decoration, and it is time for enterprises to reduce costs and increase efficiency and change houses! ”
Recently, a flyer on the Internet about the rent reduction of Beijing Financial Street, the words "rent halved" stimulated the eyeballs. In the case of the Outstanding Centre, for example, the price dropped from $24 to $11 per square metre** (effective rent), which can be called a fire sale price.
Figure provided by the interviewee.
China News Weekly contacted the publisher of the online flyer, and the relevant intermediary manager said: "It is indeed the lowest**, but it can't be lower." It is also a low price that is close to the Chinese New Year, and if you want to find a house, you need to do it as soon as possible. ”
You must know that Beijing Financial Street, known as the "brain" of China's financial management, was once the first large-scale targeted development of the financial industry functional area in Beijing, and the rent and occupancy rate of Grade A office buildings in this area were the highest in Beijing.
As a veteran office location broker, Song Kang (pseudonym) has a deep sense of the hot and cold changes in the market, he has been working in Beijing's Financial Street for more than five years, "When I first came to Financial Street in 2018 as a real estate agent, the vacancy rate was 3%-5%, which can be said to be difficult to find. ”
Compared with the price reduction of the office market today, Song Kang feels that there are two heavens, "Although the leaflet says the effective rent, it can almost be regarded as one of the cheapest periods of office rent since I started my career." ”
Not only in Beijing, but also in first-tier cities, it is an indisputable fact that office rents have fallen. According to data from Colliers International, in the fourth quarter of 2023, the rents of Grade A office buildings in first-tier cities such as Shanghai, Beijing, Shenzhen, and Guangzhou all decreased to varying degrees.
Among them, Beijing's Grade A office buildings decreased by 32%, the rent of Grade A office buildings in Shanghai decreased by 2% month-on-month5%, Guangzhou Grade A office rents decreased by 2% quarter-on-quarter, and Shenzhen Grade A office rents fell to 5% quarter-on-quarter.
According to the data of the China Index Research Institute, the average rent of office buildings in major business districts in 15 key cities across the country in the fourth quarter of 2023 will be 470 yuan square meter days, compared with **034%, the decline has also widened from 2022, falling to a new low in the past 5 years.
The figure refers to the Research Institute.
Shi Chen (pseudonym), a real estate agent in Shanghai, told China News Weekly that in April last year, he assisted a client who was selling a 42 yuan square meters per day of transaction** signed a small office in Shanghai Lujiazui World Plaza. When I asked the price again in December, the owners of several similar units in the building said 335 yuan per square meter per day, or even a little lower.
Lin Yi (pseudonym), a commercial real estate agent in Shenzhen, also told China News Weekly that although there is no off-peak season in the office rental market, some owners will be relatively anxious because it is before the Chinese New Year, so the preferential conditions will be relatively wide, resulting in the phenomenon of "involution" of rent.
In Lin Yi's view, compared with large owners with single property rights, it is more small owners who are willing to give a greater rent reduction. Vacancy means that there is no income, property fees, management fees are not a small amount, and if you have a loan to buy a home, then the pressure is even greater. On the other hand, there is no need to explain to the same type of tenants like large landlords**, many of the prices can be negotiated. After all, it is better to give the rent ** to the tenant than to leave it vacant. ”
Balance between supply and demand
Why has the rent of a always tall office building dropped so much?
* It's always determined by supply and demand," many of the interviewees stressed to China Newsweek.
Song Kang has a deep understanding of this, in recent years, Beijing's office buildings have become more and more volatile, and rising stars have sprung up like mushrooms after a rain, "Whether it is Lize SOHO, the Asian Olympic plate, or the Tongzhou Canal CBD, it has attracted many enterprises to move in." ”
In recent years, he has witnessed many companies moving from core areas to non-core areas, "some of them move out because of their own office buildings, some are seeking to improve the development environment, but more to reduce costs and increase efficiency." ”
The new ** injects new vitality into the market, brings more choices to customers, and higher project quality and lower pricing are more attractive to customers," Kang Yajuan, head of the Shenzhen research department of Colliers International, told China News Weekly.
This reminded Song Kang of a time when he was impressed by the fact that a large institution moved from Financial Street to Beijing Lize because of the "integration demand". In contrast, Lize SOHO is larger and more technological; However, the optional location of the financial street does not have a usable area that can meet the advanced needs.
Not only Beijing, but also the new office buildings in first-tier cities continue to be at a high level. According to the data provided by Colliers International to China News Weekly, in 2023, the annual new ** volume of Grade A office buildings in Beijing, Shanghai, Guangzhou, and Shenzhen will be 640,000 square meters, 1.11 million square meters, 400,000 square meters, and 82 square meters, respectively70,000 square meters.
On the one hand, the first end is accelerating the volume, while the demand side is slowly boosting.
Xia Ri, a researcher at Anbound, pointed out that corporate expectations and expansion intentions, leasing strategies and lease surrenders of leading manufacturers are the core factors affecting the entire demand side.
Kang Yajuan further said that for today's enterprises, reducing costs and increasing efficiency by replacing offices has become the primary purpose of leasing decisions, and relocation is the mainstream transaction type. It is common for relocation to reduce leasing costs while improving office quality and space expansion.
A typical phenomenon is that as Internet giants reduce costs and increase efficiency, office rents in once popular areas have been greatly affected.
Taking Beijing as an example, from 2022 to 2023, ByteDance, Microsoft, and iQiyi have all surrendered their office buildings in Zhongguancun, Beijing, to varying degrees, with ByteDance alone surrendering more than 100,000 square meters of area, and Meituan also surrendering 30,000 square meters from the Wangjing area ahead of schedule.
In line with this, Cushman & Wakefield data shows that as of the end of the fourth quarter of 2023, the largest decline in the rent of Grade A office buildings in Beijing is in Zhongguancun and Wangjing Jiuxianqiao business districts, with rents of **8 year-on-year respectively3% and 77%。
Under the change in supply and demand, the vacancy rate of Grade A office buildings in first-tier cities has also continued to rise.
According to Colliers International, as of the fourth quarter of 2023, the year-end vacancy rate of Grade A office buildings in Beijing reached 198%, and the vacancy rate of Grade A office buildings in Shanghai climbed to 201%, and the vacancy rate of Grade A office buildings in Guangzhou is 162%, and the vacancy rate of Grade A office buildings in Shenzhen is as high as 262%, all of which have climbed to a high level in the past three years.
Who benefits from "rolling" up?
Rents are lowering, vacancy is rising, and in the face of an increasingly difficult living environment, office landlords can't sit still and begin to "practice internal skills".
In Song Kang's view, for large office buildings, the difficulty is not to reduce rent, but to reduce rent more "decently". At this time, large and medium-sized enterprises will talk about some "equity replacement".
For example, naming rights. Song Kang said that under normal circumstances, the naming right of a building will not be given easily, but in 2023, a company only rented four floors of a building in Chaoyang District, and talked about the naming of one exterior wall logo, "This situation was very rare before." ”
There are also additional facilities, such as large companies that want to build their own staff canteens. Such customized needs require a lot of effort in decoration planning. But in order to attract the right customers, it has now become "all can be discussed"; Many landlords will also give away parking space rights and interests to support the customization of the gym's ecological collocation.
The rights and interests of the unknown price are "** rent reduction", which improves the cost performance and leasing experience of the office building in the form of "buy and give".
Of course, for small owners, the way to reduce rent is even wilder.
In terms of hardware, free customized decoration is given, focusing on "zero cost" to renovate the workplace space, focusing on worry-free and money-saving; There is also a disguised "rent subsidy", which can reach 30%-60% of the rent in January; If you are afraid of the trouble of moving in the office, you can also give away the move for free and do one-stop service.
Figure provided by the interviewee.
At the end of the year and the beginning of the year, the rent-free period has also become a "killer feature" for landlords to attract tenants. Lin Yi joked that many owners didn't know the meaning of the rent-free period before, and they needed to explain that "it means that no rent is charged during the decoration configuration period". The current rent-free period can be talked about 1 month, and the contract period can even reach 3-6 months.
The marketing gimmick of signing a contract to send a mobile phone makes the rental and sales information out of the circle. The leaflet is clear and clear: during the event period, "the transaction of more than 300 will give an iPhone and Huawei mobile phone", which can also be cashed.
Figure provided by the interviewee.
Under all kinds of fancy rent reductions, Song Kang lamented that the office market has really moved from a seller's market to a buyer's market, and some Grade B office tenants have moved and upgraded to Grade A office buildings, and the financial street has also ushered in many new faces.
Trading volume is also starting to be active. Shi Chen said that from the perspective of Shanghai's office market, his transaction volume in the last three months accounted for nearly half of the transaction in the past year. ”
Taking Beijing as an example, Colliers International data shows that new demand in the Beijing office market continued to recover in 2023, and in the fourth quarter, the net absorption of all asset classes in the Beijing office market returned to positive values.
Having said that, in fact, compared to other first-tier cities, Beijing's resilience is still very strong," Song Kang added, adding that as one of the "most expensive" in Beijing, the low price of some financial streets is not a very common phenomenon. There are also hot and cold differences between regions, especially the rents of old Grade A office buildings such as the Blue Building, which have been reduced but also very strong.
On the other side of the downward trend in office rents, in fact, some people have already started to "**".
Taking Beijing as an example, data from Cushman & Wakefield shows that Beijing recorded a total of 57.6 billion yuan in large transactions throughout the year, an increase of 89% year-on-year1%；In 2023, the turnover of owner-occupied buyers accounted for 49% of the total transaction value, of which 9% were office properties.
Reference: 2023 China Office Rent Index Research Report, January 24, 2024, China Index Research Institute.
Author: Yu Shengmei Editor: Yu Yuan.