Old malls morph into offices in Beijing

Updated 2018-03-05 10:13:02 China Daily

Cyclists ride along a road near the China Central Television headquarters in Beijing. There is a lot of interest in converting shopping complexes and similar realty into office spaces in Beijing this year.

Interest in converting shopping complexes and similar realty into office spaces continues to remain high in Beijing this year, industry insiders said.

Property firms see higher gains arising from growing demand for offices as various businesses are expanding while new startups are being set up everywhere, according to a recent report from JLL, an international real estate research firm.

Hence, in 2017, buyers showed great interest in converting many old or aging Beijing properties housing retailers and other commercial establishments like hotels into leasable office spaces, given the latter's lucrative nature, it said.

The 27-year-old North Star Shopping Center, once owned by North Star group, a State-owned enterprise, was closed down in January after a string of losses.

North Star group said the shopping center generated sales of 1.2 billion yuan (0 million) back in 1997. However, the property failed to survive as e-commerce and emerging New Retail companies caused a sharp drop in footfalls, which in turn led to closure of shops and exodus of tenants, industry insiders said.

Similarly, Parkson Retail Group announced closure of its shopping mall in Taiyanggong, Beijing, in October 2016. The property was taken over by realty investment fund ZRiver Capital, which is renovating it to install rentable office desks, according to a report in Beijing Youth Daily in late January.

China Vanke, a realty firm, bought a branch of Xidan Department Store in Shilipu, Beijing, in 2016 to convert it into an office complex, it said.

Despite increased supply, not many office spaces are vacant. In fact, vacancy rate in the office building segment in Beijing remained under 10 percent in recent years (under 5 percent in core commercial areas).

Monthly rental for such spaces was up to 400 yuan per square meter, according to data from Cushman and Wakefield, a provider of property services.

With last year's GDP growth rate touching a healthy 6.9 percent, around 341,000 square meters of office space in Beijing was rented out in 2017, up 77 percent from 2016, according to real estate consultancy Colliers International.

Property conversion projects somewhat rescued developers hit by tightened regulations and policies on construction land, experts said.

In September last year, the State Council, China's Cabinet, approved the Beijing local government's plan to control expansion of newly added construction land. The State Council said that land for rural and urban construction in Beijing would be decreased to 2,860 square kilometers by 2020 and to 2,760 sq km by 2035.

According to Colliers International, 11 new office realty projects will be completed this year, with a gross area of 1 million square meters.

Increased supply may result in a slight decrease in the rental of grade A offices, which would likely be welcomed by cost- and location-conscious tenants, it said.

Last year, the average monthly rental level grew 0.4 percent to reach 331.8 yuan per sq m, due to steady demand and the introduction of new offices with relatively high rents into the market, it said.

Demand was mainly from domestic companies in diverse industries, including finance, consulting, information technology, real estate, media and manufacturing.

Also in the News

Nicole Kidman Recalls Oscar Glory: Loneliest Time
Showbiz2016/06/16 13:58June 26 2018 03:44:13

Nicole Kidman Recalls Oscar Glory: Loneliest Time

Attending Shanghai International Film Festival, Nicole Kidman talks about her role in "Grace of Monaco".

Labor Day Travel Peak Starts
Also in the News2014/05/01 12:16June 26 2018 03:44:13

Labor Day Travel Peak Starts

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'
Also in the News2014/04/18 13:18June 26 2018 03:44:13

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'

Hollywood star Johnny Depp's speech in the upcoming new film "Transcendence" has been disclosed on Friday, April 11th.

Most Watched

News:
China World Business Sports Showbiz Audio
Video:
C4 My Chinese Life The Sound Stage China Revealed Showbiz Video Travel Video
Photos:
China World Fun Travel Entertainment Sports
Travel:
Beijing Shanghai Guangzhou
Lifestyle:
Live Music Opera & Classical Movies Traditional Shows Exhibitions
Learn Chinese:
Chinese Studio Living Chinese Everyday Chinese Just For Fun Chinese Culture Buzzwords