In Guangzhou, the technology and e-commerce sectors have traditionally been located in non-Grade A offices in decentralised locations, including some of the city’s science and technology parks. However, as the industry has blossomed, many companies within these sectors have found themselves in need of more office space. Moreover, in a bid to attract high-quality talent, a need to be located in offices that provide a modern working environment in more business orientated locations has also arisen.
For these sectors, this presents as a challenge. Whilst business is booming, rental budgets have not yet risen to a point where they are able to afford Grade A offices in more established CBD locations, such as Zhujiang New Town. And for those looking to build, the boom has come too late with most developable land in traditional CBD areas already sold and accounted for. As a result, the focus of attention is now shifting to Pazhou district. Unlike other CBD areas, which have pinned their aspirations on finance-related industries, Pazhou plans to differentiate itself as a headquarter base for leading internet, e-commerce enterprises and local state-owned companies. At present, there is only one Grade A office building in Pazhou, which Poly Fair completed in 2006. However, by 2020, Grade A office stock will reach one million sqm with companies such as Tencent, Alibaba and Fosun currently building new offices in the district.
And it’s not just the new economy that is supporting the growth of Pazhou. As industries in the Pearl River Delta continue to climb up the value chain, manufacturers are placing greater emphasis on R&D and in many cases looking to integrate and relocate R&D operations along with front line sales and marketing in Guangzhou. Indeed, one of the key development goals for Guangzhou’s economy is to become the Pearl River Delta’s manufacturing service hub. The availability of land and increasing amount of affordable office space will make Pazhou a popular destination for manufacturers in the future. To support the district’s credentials as an e-commerce and manufacturing service hub, the district also is home to the Pazhou International Exhibition Center, which is one of the largest convention centres in Asia and in the world.
Right now, Pazhou is still in its early stages of office market development. However, as the new office buildings gradually come on line over the coming years, demand will follow. Given that land supply in traditional core CBD areas has largely dried up, the district will also likely be one of the key growth areas in the Guangzhou Grade A office market.
Figure 1: Key submarkets in Guangzhou
Source: JLL
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