Shanghai is set to surpass Hong Kong as the largest office market in China when 11 million square meters of Grade A space will be available by 2020, real estate service provider JLL said in a latest report.
Around 1.1 million square meters of prime office space are expected to be available in Shanghai's central business district by then. An additional 3.3 million square meters of office developments will be completed in the decentralized Pudong, Hongkou and Minhang sub-markets.
"Domestic firms are expected to drive demand for Grade A office space in Shanghai, while more multinationals are likely to vie for prime office space by 2020," said Joe Zhou, head of research for JLL China. "This high forecast demand for office space is likely to absorb the massive supply pipeline over time."
Notably, technology firms were the main tenants of Grade A office space in Shanghai, Beijing, Shenzhen, Guangzhou and Chengdu, JLL's data showed.
"Large volumes of capital funding are enabling more tech companies such as Didi Chuxing and Baidu to upgrade or expand to Grade A office space," said Megan Walters, head of research for JLL Asia-Pacific.
"This trend is supported by inventories as all four first-tier cities in China's mainland have rapidly growing CBD markets that offer new Grade A space."