The next growth point in Huangzhou’s office marketSeptember 18, 2019 / By
In 2Q19, office demand in the technology industry continued to surge. Net absorption of Hangzhou business parks was nearly 150,000 sqm, representing a beacon of hope after several quarters of slow growth of the office market.
Market Portrait: financial services and TMT industries form a dual core
Hangzhou’s office demand has always been driven by financial services companies. In particular, Qianjiang New City is the most attractive place for financial services companies, with the total office demand accounting for 51%. At the periphery of the office sub-markets, a newly-developed zone of business parks has formed in connection with anchor enterprises, including Alibaba and Hikvision, following government industrial planning. TMT companies dominate the business park market with a 62% office share, supplemented by professional services, trade, advertising, etc., forming a second business area separate from the traditional office CBDs.
Figure 1: Leased area proportion of different industries in Grade A office space in 2019
Spatial Density: market-oriented office space vs. industrial business parks
Due to its high-quality property conditions, superior location and convenient transportation infrastructure, Qianjiang New City has always been the preferred location for regional headquarters. With the increase in leasing demand of large enterprises in 1H19, Qianjiang New City’s role as an economic core has intensified.
Map 1: Hangzhou office space and business park rent distribution map
Meanwhile, the total supply of business parks is several times larger than that of office space. The flexible and low-density space arrangement, combined with relatively low, government-subsidised rents, are encouraging factors for occupancy rate to remain above 85%. The TMT industry is not dependent on convenient customer and traffic accessibility, but is quite sensitive to rent and space, and therefore has had little impact on the office sub-markets located in the city centre. Before the rise of high-quality business parks, more than 80% of applied technology companies were concentrated in the traditional CBD. However, since 2010, the new demand for TMT companies in business parks has increased nearly tenfold.
Map 2: Hangzhou applied technology enterprises placement trend
Source: China National Enterprise Credit Information Publicity System
What will the future be like? – connection brings inflows
Metro Line 5 Phase I opened in May and Phase II will open by end-2019. This will form a stronger link between business parks and the office sub-markets, attracting talent and new business inflow with reduced commuting time. In the long term, the preferential policies and continued governmental support for the area will bring a bright future to business parks in Hangzhou.
Map 3: Map of Hangzhou Metro Line 5
Source: Hangzhou Metro
More on 'Office' in 'China'
- Industrial offices change Chengdu’s office landscapeDecember 1, 2023
- What’s the latest story of Chinese firms going overseas?August 29, 2023
- Office demand from IT sub-sectors in ChinaJuly 7, 2023
- The outlook of office demand in South ChinaMay 23, 2023
- China leads in global NEV transformationNovember 22, 2022