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The changing landscape in Tianjin's Grade A office market
Like many other Tier 2 cities in China, Tianjin has seen a significant amount office supply come onto the market at the same time. Within the last five years, Tianjin's total office stock has doubled, reaching 2,100,000 sqm by the end of 2015. The supply of Grade A buildings, which we define as generally wholly-owned buildings in core locations with superior specifications, more than tripled during that same time period, reaching 603,000 sqm. But while the office sector grows in size, and new completions improve in terms of building specifications, there has been little growth from the sectors and companies that occupied space in the earlier waves of office buildings. As a result, many of the newly completed projects have focused on filling space with P2P companies — companies that provide a platform for connecting lenders and borrowers – and other related wealth management firms. In recent quarters, these companies have come into the market at unprecedented rates, usually occupying large sizes and paying rents that are slightly higher than the market average. But while this has provided relief for landlords in the wake of a supply wave, the P2P and wealth management industry has proven to be less than stable as some companies experience bankruptcy or shut down due to regulation. For office buildings to be healthy in the long-term, they need a diversified and dependable tenant base.
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23 May 2016