TMT sector leads demand for office space

Technology, media and telecom (TMT) companies continued to be the largest source of demand for Grade A office space in China in the first quarter, according to data released on Wednesday by global property services provider CBRE.

Between January and March, the area leased by TMT firms in major cities accounted for 42 percent of the total, the highest since CBRE began to track such data. That compared to 18 percent in 2018 and 35 percent in 2020.

In large-scale transactions — those involving more than 2,000 square meters in a single case — the TMT sector took 52 percent of the total leased space.

"The TMT sector surpassed the financial industry to become the largest single industry occupier in 2020 with the latter taking about 25 percent of the total leased Grade A space," said Sam Xie, head of research at CBRE China. "Over the next five years, the TMT sector is estimated to grow rapidly in terms of its number of startups, company scale and quality as the country continues to offer incentives to support development of Beijing, Shanghai and the Greater Bay Area into international technological innovation centers as well as the establishment of other qualified cities into regional technological innovation hubs."

Given the increasing importance of the TMT sector to the country's Grade A office market, CBRE launched its T25 China Tech District Rental Index on Wednesday. The quarterly index, which tracks like-for-like rents along with other data including net absorption, vacancy and leasing activity in 25 key technology districts in nine Chinese cities — Beijing, Shanghai, Shenzhen, Hangzhou, Chengdu, Chongqing, Guangzhou, Wuhan and Xi’an — stood at 146.1 in this year's first quarter, representing an accumulated average rental growth of 46.1 percent in the 25 tech districts since Q1 in 2010.

Net absorption, a barometer of market demand for office space, totaled 600,000 square meters in the 25 tech districts in the first three months of 2021, with Shenzhen High-tech Park, Guangzhou Pazhou and Shanghai Zhangjiang the top three performers.

In terms of rents, Beijing Dongsheng, Beijing Zhongguancun and Shanghai Zhangjiang registered the strongest gains, according to CBRE.