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News Release


Warehouse market in Tianjin witnessed large take-up from 3PLs; popular foreign brands kept coming in and diversified Tianjin retail market

According to JLL Tianjin’s 3Q15 Property Review

Tianjin, October 26, 2015 – JLL's 3Q15 property review revealed the following:

  • Leasing demand in Grade A market reached a record high
  • Warehouse demand from Third Party Logistics firms continued to expand
  • International brands entered Tianjin improving the overall retail environment
  • Sales volumes remain robust as the PBoC rolls out further easing measures
  • Impact from explosion at dangerous goods warehouse




Net absorption for the overall market reached a record high in 3Q15. In the Grade A market, wealth management firms dominated new lettings, as the sector actively set-up new branches. Notable transactions included Huawei, a local wealth management firm, leasing 2,990 sqm at Tianhui Plaza A and Yucheng, another wealth management firm, leasing 2,066 sqm at Joy City.

In the key office submarkets, growth was largely supported by demand in the Old Town–Haiguangsi submarket. A notable project is Joy City, a 63,900-sqm Grade A office tower developed by COFCO. About 49% of the lettable space in the building has been leased to wealth management firms and upgraders from nearby low quality office space. The building opened in Q3.

New supply of 148,000 sqm (GFA) from Joy City and Beijing Financial Street Holdings' Financial Street Nankai Center Plaza A entered the market in 3Q15. In the Grade A office market, total stock reached 554,210 sqm, a 37% increase q-o-q and y-o-y. Due to future supply pressure, the vacancy rate for the Grade A office market rose sharply to 44.3%.

Landlords of existing buildings began to express concern about losing current high-profile tenants. Net effective rents declined 1.6% q-o-q to RMB 118 per sqm per month in the Grade A office market.

By end-2015, we expect most of the future pipeline to enter the central Tianjin office market. This will increase competition in the core submarkets among tenants seeking Grade A, Grade B and lower quality office space.

"Since the future pipeline will enter the different key submarkets, we will see competition increasing within the next two to four years. While the high rent affordability of the main demand driver, wealth management firms, will be able to support the rent level." said Lv Weiran, Head of the Markets Team in the JLL Tianjin Office.

At the same time, it is likely that the Free Trade Zone and the Capital Economic Circle will be promoted to the city's service industry, elevating the need for high quality office space.

"Given that demand is robust, Sunwah Tower, a high quality building, is expected to complete in 4Q15, increasing competition in the Haihe Riverside submarket," Lv Weiran added.


Demand decelerated in 3Q15 with total net absorption amounting to 37,000 sqm. Traditional retailers as one of the main tenants for the Tianjin warehouse market did not see much leasing transactions. Also less new supply compared with last quarter also resulted to the declining net absorption. However, logistics firms remained active in the leasing market. Michael Hart, Managing Director at JLL Tianjin, pointed out, "Logistics firms prefer locate close to e-commerce giants, like or Vipshop or close to terminal consumers in the city. Geographic advantage has led to the Wuqing and Beichen submarket becoming the favourable destinations for logistics firms." For example,, a domestic logistics firm, leased around 20,000 sqm of space in Prax Wuqing Logistics Center, which houses distribution centers of several e-commerce retailers in north China. Best Express leased about 12,000 sqm in Beichen submarket to be close to consumers in Tianjin city.

Two new non-bonded warehouses entered the Wuqing submarket. Goodman Wuqing Logistics Center Phase II and the Prax Wuqing Logistics Center added a total 90,188 sqm of space. Two projects completed with commitment rates lower than average since nearly 650,000 sqm of space entered the market in the first half of 2015. Therefore, even though demand from logistics firms and e-commerce retailers remained active, the overall vacancy rate went up by 1.3 percentage points, reaching 19.2%.​

Non-bonded warehouse effective rents declined in emerging submarkets. Rents of mature submarkets like Airport and Beichen area remained unchanged. Two new warehouses entered during a tenant-favourable period due to the supply influx especially in Wuqing submarket over the last two quarters in 2015. As a result, developers took more flexible pricing strategy trying to encourage tenants to absorb vacant space, which dragged down the overall net effective rents slightly to RMB 0.90 per sqm per day.

We forecast that demand from e-commerce retailers and logistics firms will remain robust. The future supply will push up vacancy rate for the overall market until it peaks at end-2016. Rents will keep flat rather than go up until 2016 when the vacancy rate is expected to retreat downwards.


The overall retail market is becoming more diversified as more international brands entered the market. In 3Q15, demand continued to be driven by the food and beverage (F&B), apparel and entertainment sectors. For projects under adjustment, developers prefer to introduce large-sized entertainment tenants to take-up vacant space and increase foot traffic. American and Korean brands expanded in 3Q15. For example, Innisfree and Etude House opened several stores in shopping malls. Abercrombie & Fitch opened its first store of over 300 sqm of space in Riverside 66, the company's fourth store in Mainland China. Forever 21 and Adidas are going to open over 1,000 sqm of flagship stores by end-2015, which is another sign for the growing retail market. Sunny Yin, Head of Retail at JLL Tianjin, commented," core retail submarkets, for example, Nanjing Road and Binjiang Avenue are still the targeted area for international fast fashion and trendy brands, most of them prefer to open their first store in this area."

One shopping mall – R&F Square – opened as a community mall to serve nearby residents. The new mall added 43,000 sqm in the Old Town submarket, featuring middle-range fashion brands, kids' entertainment and F&B sectors. Moderate demand and limited new supply dragged down the vacancy rate by 0.2 percentage points to 16.7% in 3Q15.

Spot rents remained unchanged. Even though a new mall entered with relatively low rent and a few shopping malls lowered rents to keep tenants, well-performing malls in better locations, such as Joy City and We Life Plaza, offset the decline. Rents for well-performing malls continued to grow as demand for space in mature projects remained strong.

In 4Q15, two more large-sized malls, Aegean Shopping Mall and Delight City are expected to open in non-traditional retail areas and will bring total stock to nearly 3.5 million sqm.

This influx of 300,000 sqm of new supply may need several quarters for absorption and several projects are undergoing adjustment; therefore, the vacancy rate by end-2015 is expected to climb to 18.5%. Spot rents for the overall market will be dragged down accordingly. However, as shopping malls such as The Exchange Mall and Robbinz Department Store will finish adjustment in 2016, the vacancy rate will see a gradual decline.

High-end Residential

The People's Bank of China rolled out more loosening policies in 3Q15, providing mortgage easing support to overall housing demand. The required down payment on mortgages was cut from 30% to 25% for first time home buyers, making this the third cut this year. Total sales volumes also responded in the high-end residential market as another 2,038 units were sold in 3Q15 but still fell 12% q-o-q as 2Q15 was very high. The ease of financing has continued to bring more buyers back to the market. Wellington's Riverside Garden, developed by Lujiazui, transacted 488 units making it the most active project this quarter. Demand in this project continues to come from upgraders who are taking advantage of easier financing. 

Encouraged by the positive signal from the central government, developers launched an additional 2,911 units this quarter, more than doubling the total from 2Q15. Most notably, the National Tourism project in Meijiang, developed by Sunac and Greentown, launched 840 units of new supply accounting for about 30% of the total. The project released pent-up demand for high-rise residential from residents living in the Hexi and Xiqing districts as high quality residential supply in the area has been limited. Four new high-end residential projects began pre-leasing within the last year in the Meijiang submarket after a period of more than 5 years without newly launched units. 

Capital values continued to accelerate as more high-end residential projects enter the market. In 3Q15, CV's increased 2.1% q-o-q to RMB 23,931 per sqm. The Meijiang area recorded the highest growth rate among all submarkets at 7.0% q-o-q followed by Heping District which grew at 6.9% q-o-q. "Average home prices are also increasing as new projects, located to future metro lines and scenic environments, are able to increase prices. Additionally, more townhomes are being brought to market, pushing up the average transaction price," remarked Chelsea Cai, Head of Research for JLL Tianjin. For example, CITIC City Plaza Phase 1, which transacted 172 units this quarter, was able to sell its high-rise units at a 10% premium (project transaction price vs. 3Q15 high-end market average transaction price) given its location alongside Haihe River. The same project's townhomes are yielding a 65% premium.

Tianjin Binhai New Area Explosion

In August Tianjin got international recognition for the wrong reasons, when a fire at a dangerous goods warehouse in Tianjin's port area led to a large explosion resulting in the deaths of a reported 160 people and serious property damage. The immediate impact was the damage to a nearby residential compound, a light rail system and some factory and retail properties within approximately 2km as well as some degradation in air quality before the fire was extinguished.  Longer term impacts are mainly related to damage to Tianjin's image and reputation.  The direct impacts to property were limited to those adjoining properties.  Central Tianjin is more than 40km from the blast site and even parts of the immediate Binhai area within 3-5 km did not experience any direct impact from the blast.  With the exception of a few factories and the residential compound, life is back to normal for most employees and residents of Binhai and Tianjin in general, but concerns about companies following safety regulation linger.