Shenzhen Grade A Office

14.88
Market Overview

3Q23

JLL South China Research

Shenzhen Grade A Office
Market Review
 Shenzhen major office submarkets

Bao’an
Central
Nanshan
Qianhai

North Station
Business Area

Office GFA （ sqm ）

Futian
Luohu

N
Source: JLL
Note: Stock at end-3Q23

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 Shenzhen major office submarkets
Qianhai’s stock rose rapidly since 2016
Grade A office stock by submarket

Futian CBD
High-Tech Park

Caiwuwei
Qianhai
Chegongmiao
Houhai

Source: JLL
Note: Stock at end-3Q23.

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 Shenzhen’s office market on a steady recovery
Three projects entered the market this quarter, all located in Qianhai

Grade A office demand and supply

Source: JLL
Note: Stock at end-3Q23.

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 Shenzhen Grade A office market quarterly review
New Supply Distribution in 3Q23
Office GFA （ sqm ） New Project GFA （ sqm ） Precinct

COFCO Asia
65,000 Qianhai
Pacific Center

Core submarkets New Project GFA （ sqm ） Precinct

Emerging submarkets
Aviva-COFCO
60,000 Qianhai
Tower
North Station
Business Area
Liuxiandong
Headquarters
Bao’an Central Base

High-Tech
Park Sungang
Chegongmiao
Huaqiangbei

Qianhai Futian CBD Caiwuwei

Houhai Shenzhen Bay
Super Headquarters New Project GFA （ sqm ） Precinct
Base
Chow Tai Fook
Qianhai Finance 100,000 Qianhai
Building

Source: JLL
Note: Stock at end-3Q23.

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“ Leasing demand
saw a slight upturn
“ Comparison of Net Absorption Breakdown
2Q23 vs 3Q23

—— Shenzhen’s office market witnessed

a clear improvement in terms of leasing
activities compared with last quarter.

With very appealing lease terms offered

by recently completed projects, a handful
of enterprises took the opportunity to
move into Grade A office buildings, which
has made a considerable contribution to
this quarter’s net absorption.

Source: JLL
Note: Non-leasable take-up refers to the area taken-up in self-owned headquarters or by company self-use in strata-sold units;
Leasable take-up refers to the net absorption in leasable projects.

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 Business outlook on the improvement, leasing demand yet to catch up
The financial sector remained a stable driver of leasing demand

Transaction analysis for the past 12 months Transaction Types (By GFA)

% Change
y-o-y

↓ 0.4 ppts

↓ 5.4 ppts

↓ 10.6 ppts
Area Leased (By number of transactions)

↑ 4.8 ppts

↑ 6.9 ppts

↑ 4.8 ppts

Source: JLL
Note: Analysis based on leasing transactions from the last quarter by GFA, tracked by JLL ； Other industries include 3rd party office operator,
manufacturing, logistics & transportation, culture, sports & entertainment, hospitality & F&B, public organization, energy, ESG & public utilities,
pharmaceutical & life science, agriculture and conglomerate.

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 Shenzhen Grade A rent map in the context of metro (3Q23)

205+

230+ 185+ 195+ 165+

185+ 190+ 220+

240+

165+ 165+

210+

130+ 215+

Average rent

Key metro interchange station

175+
Key metro station

High-speed train station

Source: JLL

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 Supply from emerging submarkets catered to large-sized demand

Distribution of Shenzhen’s Core and Emerging Submarkets Demand for large

SMEs with relatively
low rent affordability office space
Emerging
Submarkets
Upgrade of
Demand for cost-
surrounding IT and
saving
manufacturing industry

Well-known enterprises settled in Qianhai

Finance

Office GFA （ sqm ）

TMT

Core submarkets
Professional
Emerging submarkets
services

Source: JLL
Note: Stock at end-3Q23

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 Qianhai’s vacancy rate rose with three new projects
Cost-saving relocations helped bring down the average vacancy rate of stock projects slightly

Grade A office vacancy rate Vacancy rates by submarket

Source: JLL

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 Rents continued to slide under vacancy pressure
Incremental leasing demand lacked strength, as budget-cutting remained many firms’ top priority

Submarket-level rents compared to their

Grade A office rents
historical figures

Source: JLL
Note: Net effective rent; rental basket reviewed in 2Q22; rental growth is measured on a like-for-like basis

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 Major en-bloc & bulk investment sales in recent years
Bulk sales distribution

a b c d

Hengshenying
UDC City Center T2 Upper Hills T1 C Future City
United Building
c a Meilin Nanyou Other Chegongmiao
d
b Futian Nanshan Futian Futian

2022 2022 2023 2023

Est. 46,000 sqm Est. 43,861 sqm Est. 19,200 sqm Est. 41,200 sqm

Shenhuitong
JXR Guotai Junan China Zheshang Bank
Investment
Medicine Investment Co. Securities Bank

Source: JLL

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 Key performance indicators
Grade A office (3Q23)
Indicator Submarket Data Q-o-Q Change Y-o-Y Change
Overall 12,542,711 224,650 802,308
Luohu 912,579 0 0
Total Stock * Futian 5,513,993 0 285,943
(sqm, GFA)
Nanshan (without Qianhai) 3,493,741 0 178,700
Qianhai 2,075,688 224,650 337,665
Overall 23.4% + 0.7 ppts + 1.7 ppts
Luohu 27.8% - 1.6 ppts - 2.2 ppts
Vacancy Rate Futian 15.8% +0.6 ppts + 2.4 ppts
Nanshan (without Qianhai) 27.2% - 1.2 ppts + 2.3 ppts
Qianhai 34.0% + 5.3 ppt + 2.5 ppts
Overall 169 - 2.7% - 9.4%
Luohu 136 - 0.2% - 7.7%
Net Effective Rent ** Futian 181 - 3.4% - 9.8%
(RMB/sqm/mth, GFA)
Nanshan (without Qianhai) 178 - 1.6% - 10.6%
Qianhai 140 - 5.4% - 8.5%

Source: JLL
Note: * Total stock change refers to new completions.
**Net effective rent refers to the rent excluding management fee but taking into consideration rent-free period; Rental growth rates are measured on a chainlinked basis.

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Shenzhen Grade A Office
Market Outlook

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Moving towards a sustainable recovery led by balanced growth of
consumption and investment
Thereby, stabilising the expectation and confidence of individuals and enterprises

Strengthen the positive connection between

Consumption
employment and consumption, to ensure a
Expand effective demand
consistent recovery of consumption.

Macroeconomy
Balanced recovery Continue to optimize investment-related
Attain healthy and sustainable Investment regulations and to open more investment
economic upturn by amplifying
Improve market vitality fields, thereby accelerating growth and
endogenous growth, boosting significance of private investment.
effective demand and improving
social expectation.

Reinforce the bindings between supportive

Enterprises policies and business vitality, to enhance
Facilitate confidence restoration expectation and confidence of various
market participants.

Source: JLL 2Q23

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Fully unleash policies to achieve a stronger inherently driven recovery

1 Conventional underpinning tools Utilise fiscal leverage and flexible monetary policy to maintain liquidity in the market.

2 Real estate stabilising policy

Implement city-specific measures, adjust and optimise real estate policies according
to the situations in each city and each district.

3 Consumption stimulating policy

Stress the promotion of high-quality development of the new energy vehicle industry
and encourage commercial trade and cultural and tourism consumption.

4 Pro-employment policy
Strengthen employment support for key population groups, especially relieving youth
employment pressure through multiple channels.

Foreign investment attracting

5 policy
Create a market-oriented, legalised and globalised business environment, place a
larger emphasis on attracting foreign investment.

6 Debt risk-mitigation policy

Strengthen the management of local government debt, strictly control newly added
hidden debts, effectively prevent and mitigate risks in key areas.

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Shenzhen: multiple factors supporting economic growths

Y-o-Y Growth in 1H23: 6.3%

GDP Target annual growth 6%
• In 2023, Shenzhen will continue to emphasize on the
high-quality development to promote a
comprehensive economic recovery.
Y-o-Y Growth in Jan-Aug 23: 4.2% • Specifically, achieving a balanced recovery from both
Industrial consumption and investment is likely to realise
Target annual growth above 6%
Value-Add * amplified endogenous dynamics, and to achieve
various growth targets in 2023.
• Shenzhen is planning on enforcing a series of
Y-o-Y Growth in Jan-Aug 23: 8.1% consumption-stimulating plans to expand effective
Import & demand and ensure a steady and consistent
Target annual growth 4% recovery.
Export
• Also, Shenzhen will continue to improve business
environment and government’s services to invigorate
various business entities.
Y-o-Y Growth in Jan-Aug 23: 8.4%
Total
Retail Sales Target annual growth 7%

Note: * only takes into account of manufacturing enterprises above a designated size of an annual main
operating revenue over 20 million RMB.
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 To Accelerate Shenzhen-Hong Kong's Financial Co-operation, 115
Measures1 were Launched
The “115 Measures” are designed to deepen the opening of Promote the
the Chinese financial market and lower the barriers for Hong cross-border
collaboration
Kong financial institutions and investors to enter the market. on investment
Experiment and financing
on cross- Conduct a
• “115 measures” detail “the 30 Financial Measures of Qianhai2”, border digital pilot trial on
providing more clear explanations of the latter. RMB infrastructure
payments with REITs
• Clarify the responsible bodies to implement the measures. Hong Kong
“115
• May further boost the willingness of Hong Kong financial institutions Measures”
to invest in the mainland market. Explore to deepen
• Promote the high-standard opening-up of Qianhai's financial sector
mutual the opening
recognition of Deepen the
by accelerating financial connections 3 between Shenzhen and Hong Environmental of Qianhai’s cooperation in
Information financial cross-border
Kong. Disclosure of insurance
financial market services
institutions
Reference (in Chinese only): with HK
1. Implementation Plan on the Opinions on Providing Financial Support for the Comprehensive Deepening Reform and
Opening Up of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone. Exempt
http://www.sz.gov.cn/gkmlpt/content/10/10703/post_10703647.html#20044 Broaden the
tedious
pilot zone of
2. Opinion on Providing Financial Support for the Comprehensive Deepening Reform and Opening Up of the Qianhai registration
free trade
Shenzhen-Hong Kong Modern Service Industry Cooperation Zone. procedures of
accounts and
http://www.pbc.gov.cn/zhengwugongkai/4081330/4406346/4693549/4802394/index.html special return
their features
3. Such financial connections between Shenzhen and Hong Kong should include the linkages of stocks, remittance,
remittances
financing, trading, financial services, and cross-border wealth management.

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 Over half of the total stock will be sited in Nanshan by 2026
The proportion of Qianhai’s stock will expand massively in the next two year

Source: JLL

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 Over 30% of the new supply will be self-use in 2024-2026
Mainly for TMT and financial company headquarters

Selected companies with future self-use headquarters

Source: JLL
Note: * indicates forecast.
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 Distribution pattern of annual Grade A supply (2023-2026)
Future supply will be concentrated in emerging submarkets such as Qianhai

Legend
Completion year

2026
N
2025

2024

2023

Completed

Source: JLL, MapIT

Note: Prediction based on the latest market information as of 3Q23
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 Large new supply is looming over the next few years

Source: JLL
Note: * indicates forecast; supply chart is based on the latest market information as of 3Q23.

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 Oversupply may keep pressuring vacancy in the next two years
Grade A office demand and supply Future supply distribution

N
Existing Projects
Future Projects
Core Submarkets
Emerging Submarkets
Source: JLL
Note: * indicates forecasts.

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 Overall rent unlikely to climb up soon with oversupply
Grade A offices rents Future supply distribution

N
Existing Projects
Future Projects
Core Submarkets
Emerging Submarkets
Source: JLL
Note: Net effective rent; forecast rents are measured on a like-for-like basis; rental basket
reviewed in 2Q22; * indicates forecasts.

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 “
Grade A office capital values

Self-use buyers remained the

major force behind office
purchases. Nonetheless, with
cash flow considerations in
mind, real estate investment
decisions have now been taken
with extra caution.
“
Source: JLL
Note: * indicates forecasts; Nominal capital values; forecast capital values are measured on a like-for-like basis.

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