Skip Ribbon Commands
Skip to main content

News Release


Logistics market net absorption reached highest level; Tianjin’s eighth Grade A office building entered the market in 2015

According to JLL Tianjin’s 4Q15 Property Review

​​​​Tianjin, January 27, 2016 – JLL’s 4Q15 property review revealed the following:

  • Net absorption for Grade A office reached its highest annual total since 2011
  • Warehouse market reached supply peak in 2015 and vacancy rate increased sharply
  • Department store experiencing adjustment; while large-size shopping malls dominated the 2015 retail market
  • Sales volume in the high-end residential market remained strong due to further policy support.


​For the year 2015, demand was dominated by domestic finance companies, namely asset managers and peer-to-peer lending companies, preferring large high-quality space. More than 60% of the new leasing transactions for came from this sector in 2015 making traditional sectors like logistics and manufacturing less apparent in the leasing market. We also witnessed an increase in upgrade demand in 4Q15; specifically companies moving from lower quality space into newly built Grade A buildings. For instance, Watsons moved from Jinwan Mansion to Joy City in 4Q15, picking up around 500 sqm. Additionally, Shell took up 2,736 sqm in Sunwah IFC in December, moving from Ping An Mansion this quarter. 

There were a total of five new completions in 2015, totaling 317,025 sqm, which pushed up the overall market vacancy rate to 34.7%, increasing 6.0% y-o-y. Three of the five completions were Grade A projects, including Joy City and Finance Street Nankai Block A in Old Town-Haiguangsi submarket and Xinhua IFC in Haihe Riverside submarket. The three projects added a combined 197,735 sqm and total Grade A stock reached 603,010 sqm. Due to the new completions the Grade A vacancy rate increased to 47.6%, a 13.5 ppt increase from 2014.

Overall rental values fell slightly in 4Q15, 0.2% q-o-q and 0.4% y-o-y, as landlords facing supply pressure lowered rental values to secure tenants. Capital values fell faster than rents, registering a 0.7% decrease q-o-q and 2.1% y-o-y. There remains very little interest in the investment market and we continue to witness fewer en-bloc transactions and strata title sales as price expectations between buyers and sellers differ greatly. 

Lv Weiran, JLL Tianjin’s Head of Markets, stated, “Although facing added pressure from the large pipeline, high quality buildings that are located in premium locations are still expected to see significant net-absorption from upgraders leaving Grade B and C projects.“ Yanlord Riverside Plaza developed by a Singaporean developer and will complete in 2016 in Old Town-Haiguangsi submarket, will be a good example of this.


Robust demand pushed up net absorption to 487,000 sqm in whole 2015, doubling the number in 2014. E-commerce, logistics companies and retailers continued to be main source of demand. One notable transaction was that opened a distribution center in Wuqing in 1Q15 and expanded another 30,000 sqm of warehouse space in Prologis Tianjin Jingbin Logistics Center in 4Q15, accounting over 40% of total net absorption in 2015. Retailers also saw increasing demand in line with rising domestic consumption. For example, Leyou, a kids retailer expanded 11,000 sqm of space. 

There was no activity in bonded logistics space. However, 12 non-bonded projects, totalling 850,000 sqm entered the market and pushed the total non-bonded stock to over 3 million sqm.  Vacancy rates in this sub sector grew substantially from 14.9% to 25.2% by year end – 2015.  One project that entered the market in 4Q15, was Yupei Tianjin Linggang Logistics Park, adding 99,260 sqm of space in the Tianjin Binhai New Area (TBNA).  There was no preleasing in this project. “The completion of significant amounts of new logistics space in Tianjin is a sign of developer’s confidence in Tianjin’s long term importance as a northern Chinese logistics hub,” note Michael Hart, Managing Director of JLL Tianjin. 

Net effective rents in the non-bonded market rose to RMB 0.90 per sqm per day, an increase of 0.5% q-o-q. Temporary high vacancy rate in overall market made developers slow rental growth to attract tenants. 

As consumption becomes the primary component of Tianjin’s economy, we expect continued demand from retailers, e-commerce firms and logistics companies. The recent currency devaluation should also bring back more consumption domestically, strengthening Tianjin’s position as North China’s logistics hub. In addition, upgrading demand and relocation demand from other cities such as Beijing are expected to increase. After supply peaked in 2015, seven new warehouses are expected to enter the market in 2016, totaling over 450,000 sqm of added space. We expect strong demand will push down the overall vacancy rate and rents will increase mildly by end-2016.


Demand in 2015 was three times larger than in 2014, seeing net-absorption of over 300,000 square meters. F&B, Kids, and Entertainment were the largest contributing sectors. For example, casual dining brands Matta Pizza, Kro’s Nest, and Nanjing Expression opened their first Tianjin restaurants in newly completed shopping centers. Element Fresh, a restaurant, also leased 500 sqm in Joy City, its first location in Tianjin. Kids’ retailers and entertainment, especially cinemas and gyms, took up large spaces in shopping malls. In 4Q15, Aoben Fitness leased 4,000 sqm of space in Aqua City. Besides these three active sectors, new fashion brands also made their debuts in Tianjin. For example, Abercrombie & Fitch opened its first store in Riverside 66, a Hang Lung development. Tusting, a British leather goods retailer, also opened its first location in Riverview Place Tianjin. 

One project, Aegean Shopping Mall, opened outside the core retail area, adding 250,000 sqm of space in 4Q15. By the end of 2015, six new shopping malls, including Veneto, Riverview Place, Tianjin International Trade Center, Yanlord Riverside Plaza, R&F Square and Aegean Shopping Mall came into the market, adding about 500,000 sqm of space. The large amount of new supply in 2015 as well as a handful of projects undergoing adjustment pushed up the vacancy rate to 17%, an increase of 0.3 ppt q-o-q and 2.7 ppt y-o-y.

Facing intense competition from shopping malls and the growth of the e-commerce industry, department stores continued to struggle in 2015. Far Eastern Department Store and Hanter Department Store closed, reducing the total supply by 67,000 sqm. Two more anchor department stores, La Vita and Parkson, closed as well, pushing up the vacancy rate of the overall market. However, we witnessed landlords actively adjust tenant mix. One notable example is that Joy City took over space in The Exchange Mall, as the project’s retail operator. Sunny Yin, Head of Retail at JLL Tianjin, commented, “Existing department stores are gradually adjusting their tenant mix or reformatting as shopping malls. Robbinz Department Store, for example, is repositioning its basement floor to accommodate more fast fashion and F&B brands to attract higher foot traffic.”

Although another six shopping malls are expected to enter the market in 2016, the overall market vacancy rate is still expected to decline slightly due to strong leasing demand. Sunny Yin also commented, “New shopping malls will ask for relatively lower rents than existing projects so the average market rents are expected to decrease slightly. However, well-positioned projects, that have little vacancy and see high foot traffic, will be able to continue increasing their rents.”​

High-end Residential 

2015 was marked by a series of interest rates cuts and continued relaxation of housing policies as the government tried to stimulate demand in the residential sector. In October of 2015, the PBOC cut the interest rate for the fifth time to 4.35%. In 4Q15, homebuyers in Tianjin responded positively to the policy easing and mass market transaction volume increased 16.9% q-o-q and 35.5% y-o-y. Mass market capital values increased 2.0% q-o-q but the gains were limited to Central Tianjin. Other districts, like Jinnan and Jinghai, are still digesting relatively large inventories and saw average prices fall 0.3% q-o-q despite the area’s high transaction volume.

In the high-end residential market, sales volume also rose to 3,630 units in 4Q15, up 32.3% q-o-q and 58.6% y-o-y. Demand was driven mostly by upgraders able to capitalize on reduced mortgage rates and higher loan to value ratios. The PBOC lowered the minimum capital requirement to 40% from 60% for second-time home buyers in March of 2015. 

2,976 new units were launched in the quarter, a slight increase of 2.2% q-o-q but 254.7% y-o-y. Luneng Grand Heights launched 478 units this quarter and saw an average sales price of RMB 38, 705 per sqm, 61% higher than average capital values in the high-end market. Its favourable location, between Water Park and Tianjin Tower, with an existing metro station nearby contributed to its high sales price. After experiencing strong demand throughout 2015, primary inventories in Central Tianjin remain low. Selling only 14.9% of the existing stock in 1Q15, the sales rate rose to a higher level each quarter in 2015, reaching 72.7% in 4Q15.

Capital values in the high-end residential market rose 0.3% q-o-q and 1.1% y-o-y. Prices outside the core-submarkets saw the largest increase this quarter, accelerating 2.0% q-o-q and 3.1% y-o-y. New projects in the New Badali Area, like Zhongye Mansion, sold at higher prices this quarter. The project nearly sold out this quarter after selling an additional 51 high-rise units. However, rental values remained flat once again in 4Q15 as the market witnessed no increase in demand from professionals working within Central Tianjin – the traditional demand driver in the rental market. Chelsea Cai, Head of Research at JLL Tianjin, commented, “Demand for high-residential in Central Tianjin continues to be particularly strong among upgraders who have seen financing costs fall dramatically over the past few quarters. On the other hand, first time buyers are becoming more active in affordable areas, especially as they are granted greater access to the public housing fund. ”​