Under the Chinese government’s “dual circulation” strategy of long-term development, West China has played an increasingly important role in undertaking industrial transfer, expanding domestic demand, and further opening up to the world.
JLL research has been producing the China Top 50 city-level report series for many years. This year is the first time that we ranki the top 50 corporate clients in Grade A office buildings in West China on a regional basis.
Figure 1: 2021 West China Top50 Grade A Office market industry breakdown
Source: JLL Research, as at 2Q21
From the industry perspective in the Top 50 list, traditional finance and TMT companies account for 73.8% of the leading companies in the surveyed Grade A office buildings in West China. The gap with companies from other industries has gradually increased.
Labour cost advantage drives financial service outsourcing demand in Western Chinese cities
In recent years, more financial firms have accelerated their entry into West China. From call and customer service centres in the early years to innovation and R&D centres today, financial companies’ office layout and standards have become more complex and diversified. Since 2019, Western Chinese cities has recorded nearly 100,000 square metres of net absorption of Grade A space in this category.
Figure 2: 2019-1H21 Financial Service Outsourcing demand in West China
Source: JLL Research, as at 2Q21
The TMT industry is diversifying and developing rapidly
The TMT industry has quickly become the largest source of incremental demand for the office leasing market in west China, especially after COVID-19. From 2020 to 1H21, the TMT industry accounted for 27.6% of new leases in the West China Grade A office market. As technology continues to empower traditional industries, more and more client-centric companies evolve, like online education, O2O etc. Many emerging companies are growing rapidly in the office leasing market.
Figure 3: 2020-1H21 TMT leasing demand in West China
Source: JLL Research, as at 2Q21
As the diversification and complexity of the TMT industry is much higher than others, we have subdivided TMT companies and calculated the proportion of six major segments in the West China Grade A office market: Online Education (26.9%), New Media (19.2%), Software (17.2%), Hardware (16.0%), Consumer Service/O2O (8.8%) and Games (5.1%).
Currently, the TMT industry is undergoing rapid development, and industrial development will continue to benefit the office market. The office market should re-explore the possible functions of office space to meet the changing demands of occupiers from the TMT industry.
More on 'Office' in 'China'
- The increasing adoption of robotics in China’s real estateNovember 12, 2024
- Beijing office tenant survey: resilience amid volatilitySeptember 17, 2024
- The growing popularity of games in GuangzhouAugust 23, 2024
- The impact of AI on China’s proptech landscapeJuly 24, 2024
- New CBDs are emerging in the Greater Bay AreaJune 14, 2024
