About 2.5 million square meters of business parks will be developed in Shanghai between 2017 and 2021, global property advisor Colliers International said in a report released yesterday.
More than half the new space will be in Zhangjiang in Pudong New Area and Caohejing in Minhang District.
Despite abundant supply over the coming five years, vacancy rates at business parks should remain rather low while rents will continue to rise as demand remains robust, Colliers said.
"Business parks are attractive for tenants as the average rent is 61 percent lower than that of Grade A offices in the CBD and 40 percent cheaper than decentralized Grade A offices as of 2016," said Michael Wu, senior director of office services for Colliers' East China operations. "Government incentives will further enhance cost savings for tenants."
Internet and IT companies are the largest tenants of business parks in Shanghai, accounting for 35 percent of all leases, Colliers said, based on data for the year through March. They are followed by manufacturers, at 22-percent, and finance, real estate and energy enterprises, each about 9 percent. Thirty-two percent of leasing deals are in Zhangjiang and 24 percent in Jinqiao.
The local government's call to develop Shanghai into a science and innovation center and a financial hub, as well as strong demand will keep vacancy rates at business parks rather low in the next 3-5 years, Colliers said.