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MARKETIN
MINUTES
Savills Research
Office Tianjin – November 2020
Tianjin’s office market continues to recover The Grade A office
market saw its very first project launched this year in the third
quarter.
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“Tianjin’s economic development continued to recover from
COVID-19. A Poly’s new project named Metropolis Ph I entered the
Grade A office market in Q3/2020, which stimulated the leasing
demand and lifted leasing activities. However, rental indices still
saw a downward trend due to fierce competition in the market.”
VINCENT LI, SAVILLS RESEARCH
• Metropolis Ph I, developed by Poly and located in Haihe
Riverside, was launched onto the Tianjin Grade A office market in
Q3/2020, bringing a new supply of 75,000 sq m GFA.
• Total stock of the citywide Grade Office A reached 1.53
million sq m GFA by the end of Q3/2020.
• Leasing demand and activities for Grade A office were both
on the uptrend. The financial, insurance and education sectors
accounted for the main proportion of leasing demand.
• The overall vacancy rate inched up by 0.5 of a percentage
point (ppt) quarter-on-quarter (QoQ) to 36.6%, though a dip of 0.8
of a ppt year-on-year (YoY).
• The office market’s net absorption in Q3/2020 rose to 39,523
sq m, a significant increase of 186.6% QoQ and 220.4% YoY.
• The office rental index declined 7.3% QoQ and 8.7% YoY, and
the average rent dropped to RMB120.7 per sq m per month due to
fierce competition.
• Haihe Riverside outperformed this quarter and led net
absorption space with 28,913 sq m owing to its well-developed
supporting facilities and relatively lower rents.
• In Q4/2020, the Grade A office market will see Taiheng
Building located in Haihe Riverside area debut, which will bring
140,000 sq m GFA of new supply to the citywide office market.
Andy CheeGeneral ManagerTianjin+8622 5830
[email protected]
CENTRAL MANAGEMENT
Please contact us for further information
Savills team
James MacdonaldSenior DirectorChina+8621 6391
[email protected]
Vincent LiAssociate DirectorNouthern China+8610 5925
[email protected]
RESEARCH
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SUPPLY AND DEMANDDuring Q3/2020, Metropolis Ph I, located in
Haihe Riverside, launched onto the Grade A office market, bringing
a new supply of 75,000 sq m GFA. Haihe Riverside made up the
largest proportion of existing stock, followed by the Nanjing Rd
area. The total stock throughout the city reached 1.53 million sq m
by the end of Q3/2020.
Given the new project’s exceptional leasing performance, the
overall net take-up space hiked up by 186.6% QoQ and 220.4% YoY to
39,523 sq m. Leasing demand from financial, insurance and education
sectors saw a steady increase.
The majority of take-up space was concentrated in Haihe
Riverside, recording an area of 28,913 sq m thanks to its
relatively lower rents and well-developed supporting facilities.
Traditional financial sectors were the main driver of leasing
deals, and insurance and education sectors reflected an increased
leasing demand. Main leasing activities included an insurance
company and a real estate company occupying a total space of 4,000
sq m in Maoye Building and Yuanfudao, an education company, took up
another 2,500 sq m in MIFC after leasing 8,000 sq m in Q2/2020.
RENTS AND VACANCY RATESWith the pandemic fully contained and the
gradual recovery of the domestic economy, leasing activities in
Tianjin’s office market were more upbeat, but the overall rents
displayed a downward trend. The average rental index decreased 7.3%
QoQ and 8.7% YoY, and rents reached RMB120.7 per sq m per month.
Citywide vacancy rate inched up only 0.5 of a ppt to 36.6%, a dip
of 0.8 of a ppt YoY due to the rising leasing demand
even after the new project with sizeable GFA launched in the
quarter.
The Nanjing Road area outperformed with the vacancy rate
contracting 0.8 of a ppt QoQ and 10.5 ppts YoY to 15.8%. Landlords
adopted flexible leasing strategies to maintain their occupancy
rates, pushing rents down. Nanjing Road’s rent was still the
highest, standing at RMB131.2 per sq m per month, though its rental
index saw the biggest drop of 16% QoQ and 17.4% YoY compared with
other submarkets across the city.
Haihe Riverside area saw a moderate performance in Q3/2020. Its
vacancy rate edged up 4.5 ppts QoQ to 36.8% due to the new project
launched in the precinct. The average rent of this area fell to
RMB119.2 per sq m per month, a decline of 5% both QoQ and YoY, due
to rental deductions from both the new project and other existing
projects in order to accelerate absorption. Another high-end
project is expected to launch in the precinct in Q4/2020, which
could push the vacancy rate up.
MARKET OUTLOOKThe Grade A office market will welcome a brand-new
project in Q4/2020, Taiheng Building in Haihe Riverside area, which
will bring 140,000 sq m GFA of new supply to the office market.
Tianjin’s office market will continue to see its supply exceed
demand in the future as the domestic economy still needs time to
fully recover. In addition, landlords will still adopt flexible
leasing strategies to lower rental levels to guarantee their
occupancy rates and accelerate absorption, hence it is expected to
witness decreased rental levels in the citywide office market in
the future.
Source Savills Research
GRAPH 1: Supply, Take-up And Vacancy Rates, 2015 to Q3/2020
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
2015 2016 2017 2018 2019 Q1-Q3/2020
sq m
Supply (LHS) Take-up (LHS) Vacancy (RHS)
GRAPH 2: Grade A Office Vacancy Rates, Q4/2015 to Q3/2020
Source Savills Research
0%
10%
20%
30%
40%
50%
60%
Q4 Q1
Q2
Q3
Q4 Q1
Q2
Q3
Q4 Q1
Q2
Q3
Q4 Q1
Q2
Q3
Q4 Q1
Q2
Q3
2015 2016 2017 2018 2019 2020
Citywide Xiaobailou Nanjing Road Haihe Riverside Youyi Road
GRAPH 3: Grade A Office Rental Indices, Q4/2015 to Q3/2020
Source Savills Research
Source Savills Research
80
85
90
95
100
105
110
115
120
Q4 Q1
Q2
Q3
Q4 Q1
Q2
Q3
Q4 Q1
Q2
Q3
Q4 Q1
Q2
Q3
Q4 Q1
Q2
Q3
2015 2016 2017 2018 2019 2020
Q4
/20
07=
100
Citywide Xiaobailou Nanjing Road Haihe Riverside Youyi Road
Office
TABLE 1: Grade A Office New Supply, Q4/2020
PROJECT SPACE (SQ M) SUBMARKET USAGE
Taiheng Building 140,000 Haihe Riverside For Rent