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CBD Core Area development to cement role of CBD as elite decision-making hub
BEIJING, September 21, 2017 – A newly expanded CBD will put Beijing at the forefront of the global office market, according to new research from JLL (NYSE: JLL). The company's latest report 'The Superblock Story: Beijing's Bold Business Hub' explores how the upcoming surge in high-quality office supply will invigorate the area, acting as a catalyst for the "network effect" to match that seen in other world-leading financial centers.
Eric Hirsch, Head of Markets for JLL North China, says: "Home to Beijing's soon-to-be tallest building – China Zun – the CBD Core Area will double the present amount of office stock in the CBD as 18 new buildings promising advanced building and design features come online from 2018 to 2025 and beyond. With domestic finance and professional services firms set to dominate this space, decision-makers will naturally be drawn to the area for face-to-face meetings."
The report highlights the fact that while we may work in an increasingly virtual world, decision-making still happens face-to-face. This is especially true in Beijing, where building and maintaining relationships is essential to business. As the new crop of buildings enter the market in the coming years, greater spatial availability will drive an influx of industry leaders from other parts of the city, and a new assortment of restaurants and coffee shops will provide a convenient platform for the 'human touch' required to build connections and grow opportunities.
By bypassing the need for intracity transportation, JLL emphasises that the upgraded business hub will promote efficiency along with a free flow of ideas and information between professionals, putting Beijing on a par with prominent cities like London, New York, and Hong Kong. In other words, key players from strong professional networks will be attracted to the numerous advantages offered by a single, walkable radius.
In the race to secure talent in an ever-competitive market, both the health and comfort of staff are rising in significance, and a better office space is now an important tool to attract and retain employees. Based on JLL's most recent survey of more than 200 office buildings in Beijing, new buildings in the CBD Core Area are expected to exceed the quality of current market-leading Grade A buildings, and even outshine many existing International Grade A buildings.
The new buildings will increasingly go beyond typical LEED standards and target WELL certification, as the emphasis shifts from energy-efficiency to health and wellness considerations. Companies now realize that providing a safe and comfortable work environment is increasingly important in drawing top talent to Beijing, particularly as air quality concerns continue to weigh on peoples' minds. This means that apart from higher ceilings and smart technologies, occupants can also expect to benefit from other features such as improved air filtration and sky gardens.
JLL's research figures show that office tenants from the IT sector have rapidly decreased in the last three years, while there has been a sharp rise in the proportion of CBD stock occupied by professional services firms. The report also points out that government regulations requiring a proportion of the new buildings be set aside for headquarter-use has led to the formation of an important headquarters cluster for the top names in Chinese finance. This combination of related industries will create a critical mass of professionals and decision-makers together in one place.
Projections for self-use levels in new buildings have seen a downward shift as projects near completion, meaning it is possible that more space could enter the leasing market by the time of opening. However, JLL's analysis shows that new office supply is still set to be outpaced by service sector economic growth. Beijing leads China in the service sector's share of the economy, underscoring strength in demand for office space in the city. As these new buildings fill up, landlords will enjoy greater pricing power.
"During this exciting time for the area's development, these new buildings in the CBD Core Area will forever change the character of the CBD as they complete the next phase of Beijing's journey to achieving a CBD of world-class distinction," Hirsch adds.
Read the report 'The Superblock Story: Beijing's Bold Business Hub' here.
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JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $145 billion. At the end of the second quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of nearly 80,000. As of June 30, 2017, LaSalle Investment Management had $57.6 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.
JLL has over 50 years of experience in Asia Pacific, with 36,800 employees operating in 95 offices in 16 countries across the region. The firm won the ‘World’s Best’ and ‘Best in Asia Pacific’ International Property Consultancy at the International Property Awards in 2016 and was named number one real estate investment advisory firm in Asia Pacific for the sixth consecutive year by Real Capital Analytics. www.jll.com/asiapacific
In Greater China, the firm was named ‘Best Property Consultancy in China’ at the International Property Awards Asia Pacific 2016, and has more than 2,200 professionals and 14,000 on-site staff providing quality real estate advice and services in over 80 cities across the country. www.joneslanglasalle.com.cn
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