According to data released by real estate consulting firm JLL on January 8th, the average rent for Grade A office buildings in Guangzhou in the fourth quarter of 2024 was only 130 yuan (RMB, same below) per square meter per month, a 7.5% decrease compared to the same period last year.
The phenomenon of oversupply of Grade A office buildings is spreading from second and third-tier cities to first-tier cities, with rents of Grade A office buildings in first-tier cities such as Guangzhou generally declining. In the fourth quarter of last year, Grade A office rents in Guangzhou, a first-tier city, fell by 7.5% compared to the same period.
Historical data from JLL shows that the peak rent for Grade A office buildings in Guangzhou occurred in the third quarter of 2018, reaching 196 yuan per square meter per month, and the current rent level has fallen 34% from the historical peak. By the end of 2024, the total stock of Grade A office buildings in Guangzhou reached 8.31 million square meters, with a high vacancy rate of 21%, of which 20% is internationally recognized as the “warning line.”
Zhujiang New Town is the central business district of Guangzhou with a concentration of Grade A office buildings. A person engaged in office leasing business in Zhujiang New Town revealed that since the outbreak of the COVID-19 pandemic in early 2020, many tenants in Grade A office buildings have been downsizing their office space in order to save costs.
Reports indicate that Grade A office buildings are closely related to the service industry, and leasing area can reflect the expansion or contraction trends of various industries.
Jiang Jingli, Senior Director of the Commercial Real Estate Department of JLL Guangzhou, disclosed that in the leasing transactions of Grade A office buildings in Guangzhou in 2024, transactions of less than 500 square meters accounted for the largest proportion at 37.79%; transactions of 500-1000 square meters, 1000-1500 square meters, and 1500-2000 square meters accounted for 26.73%, 11.91%, and 8.14% respectively.
JLL data shows that in 2024, the proportion of leasing transactions with an area larger than 2000 square meters was 15.43%, ranking second in the proportion distribution among various area segments.