^{Note: Prime Retail refers to the Urban market. *New Supply is inclusive of the Suburban market.}

Local retail spending offline was further encouraged in the quarter, with policy support promoting shopping at malls to help with economic recovery. Discounted vouchers for meals, movie tickets, appliances, and electronics were distributed to residents after the resurgence of Covid-19 cases in Beijing in June was over, and the city lowered its emergency response level for the virus. The more relaxed environment supported new energy vehicle retailers in carrying out active expansion plans; Nio and Roewe were among those that opened new locations in the quarter, while others committed to space. Meanwhile, leasing demand was also supported by foreign and domestic coffee and tea-drink retailers, among them Tim Hortons and Hey Tea.

Market rent growth remained negative in the quarter, with many landlords continuing to lower rents under threat from rising vacancy pressures. Urban rent growth was recorded at -3.3% q-o-q, while Suburban rent growth was -3.4% q-o-q. The downward pressure is likely to continue through year-end, as occupancy rates remain a top priority for most landlords as they prefer to keep their projects full. “Although some retailers started to report a recovery in sales, encouraging them to reconsider expansion plans that were previously put on hold, most of these tenants were bottom fishers looking to take advantage of lower rents and greater flexibility on terms,” said Ji Ming, Research Manager for JLL Beijing. “While bottom fishers still present opportunities for landlords at this time, many landlords also worry about how the virus and the colder months ahead will impact the willingness of consumers to visit and spend at malls – all of which is expected to be reflected in the rent trend during the last months of the year.”