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| Sanlitun Village, an office and shopping complex in Beijing. [Photo/ China Daily] |
The cost of renting Grade A office space in Beijing is expected to increase by 20 percent this year despite the slowdown in China's economic growth, leading more companies to move their offices, the international real estate consultancy company Jones Lang LaSalle said in a report on Monday.
"Although the rate of increase has slowed below last year's 41 percent, some resistance from price-sensitive tenants to the high rents in Beijing is now being felt," said Qin Xiaomei, chief researcher at Jones Lang LaSalle Beijing.
A number of tenants, struggling in the current economy, handed back space to the market this quarter and this may be a recurring theme over the coming quarters as companies' expansion plans are affected by the slowing economy.
Monthly rents increased to 341 yuan ($52.5) per square meter, based on gross floor area, by the end of the third quarter, up 4.7 percent from the previous quarter, according to JLL's research.
"Most of these enterprises are in the manufacturing, IT and electronic products sectors," Qin said.
Despite the slowdown in demand in the first three quarters of the year, the vacancy rate in Beijing's Grade A office market continued trending downward, reaching 5.7 percent, a 12-year low, by the end of the third quarter of this year, according to JLL.
Eric Hirsch, head of markets at JLL in Beijing, said low vacancy rates and rising rents, albeit at a slower pace, mean that some tenants are making better use of space and exploring alternative options to meet their space and budget requirements.
"This is a trend that we expect to continue into 2013."
However, a number of companies from the financial, automobile manufacturing and energy sectors were leasing space this quarter.
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