News release

Beijing’s commercial real estate market makes a warm start in 1Q23 with policy pivots and revitalizing market demand

According to JLL Beijing’s 1Q23 Property Market Review

April 04, 2023

Kyrah Cheng

Andrey Yang

+86 (10) 5922 1382

Beijing: 4 April 2023 – “Beijing’s commercial real estate market has seen demand pick up across all sectors in the first quarter. 2023 is off to a good start, and the future is promising,” said Julien Zhang, Chief Strategy Officer of JLL China. In the Grade A office market, leasing activities increased significantly with the CBD area leading the demand recovery momentum. The net absorption figure turned positive in 1Q23. In the investment market, CapitaLand completed the acquisition of Suning Life Plaza for RMB 2.8 billion. In late March, it was announced that China’s REIT pilot program will be broadened to include consumer-related infrastructure projects, which will spur the popularity of retail investment opportunities. In the prime retail market, the leasing demand has rebounded benefiting from the acceleration in retail consumption. The demand in the industrial market continued to grow, with Pinggu being the most active area. Logistics rent further increased slightly in the quarter. The high-end residential market ushered in the release of backlog demand, and the transaction volume increased by 20% q-o-q.

Grade A Office 

Office 1Q23
Vacancy 10.4%
New Supply 65,010 sqm
Rental Growth -0.9% q-o-q

Beijing office market saw a demand recovery trend, with an enquiry peak observed after Chinese New Year. Following a quiet market in the second half 2022, leasing activities have seen an uptick from the beginning of 2023. According to landlords, the number of site visits significantly increased after Chinese New Year, which improved their market confidence. More than 60% of the leasing demand is for size below 1,000 sqm. Demand for large space is rare as large-scale companies usually need longer periods for leasing decisions. The financial industry contributed 40% of total leasing volume, especially domestic financial companies. The CBD area saw market recovery first, generating more than one third of the total leasing transactions. In addition, the volume of leasing transactions also increased in Wangjing and the Third Embassy Area due to competitive pricing.

Overall net absorption turned from negative to positive, as space surrendered in 1Q23 was backfilled by increased demand. Considering both Grade A and Grade B market, landlords were still under vacancy pressures due to the cumulative vacant space surrendered in the past several quarters, which led them to continue to provide competitive leasing offers. Overall rents saw a continuous decline in 1Q23, recording -0.9% q-o-q growth and -2.5% y-o-y growth. The decline narrowed as substantial rent cuts had already been made in some projects by the end of 2022, leaving limited room for further rental declines. Landlords still provided considerable rent discounts to attract sizable enquiries and top-quality tenants. “The considerably increased leasing activities observed in 1Q23, including enquiries, site visits and negotiations, are expected to result in a boost in the leasing transaction volume in the coming quarters and we expect the demand recovery trend to persist,” said Michael Zhang, Senior Director of Office Leasing Advisory for JLL Beijing. “Vacant space in city-wide projects is expected to be gradually backfilled over the next two quarters, followed by a modest rent increase.”


Beijing's investment market saw a notable increase in market vitality, although the quarterly transaction volume decreased y-o-y. In 1Q23, the transaction of Suning Life Plaza, a complex with a total area of nearly 100,000 sqm consisting of both office and retail, attracted market attention. CapitaLand completed the acquisition of the complex for RMB 2.8 billion. This transaction further demonstrates that foreign investors have a long-term positive view of core assets in Beijing, despite short-term market fluctuations.

 “Consumer-related infrastructure projects” were announced to be included in China’s REIT regime, providing significant benefits to retail properties. On March 24th, China’s National Development and Reform Commission announced to further expand the asset scope of REITs pilot program, including department stores and shopping centres. In addition, investors active in the market continued to be optimistic about cash-flow-generating properties, such as offices, rental apartments, and logistics properties. Such investment opportunities tended to provide long-term stable cash flow and potential value-add.

“Broadening the REIT pilot to include department stores and shopping malls is not only a significant boon for the retail sector but also a shot in the arm for the commercial real estate investment market,” said Jessie Xu, Operations Director of China and Head of Capital Markets North China, JLL. “Domestic and foreign investors began actively seeking investment opportunities in 1Q23. We expect that the arrival of commercial real estate REITs policies will significantly enhance the turnover of retail assets in Beijing and continue to boost confidence in the commercial real estate market.”

Prime Retail

Office 1Q23
Vacancy 7.1%
New Supply* 216,000 sqm
Rental Growth -0.4% q-o-q
Note: Prime Retail refers to the Urban market. *New Supply is inclusive of the Suburban market

Leasing demand experienced a moderate recovery, led by consumption growth. Sales for key retail entities during the Chinese New Year holiday rebounded to pre-COVID levels, exceeding 2019 by a noteworthy margin of 13.2%. The foot traffic and consumption growth continued into March, encouraging leading retailers across sectors that were previously wary of expansion during 2022 to actively seek out leasable areas in shopping malls to benefit from the ongoing recovery in consumption. Notably, in the first quarter, the F&B sector, which experienced the most closures in terms of area in 2022, saw a significant expansion, with newly committed store area accounting for a 38% of the total new leasing area across the city.

As construction was back on track, previously suspended projects entered the market. Three new projects opened in the Suburban area, contributing a total area of 216,000 sqm to the market with high commitment rates. The most notable new project is DT51. Developed by Beijing Hualian Group – the operator of Beijing’s top luxury department store Beijing SKP, DT51 introduced more than 200 mid to high-end retailers to the underserved Ya’ao submarket and was well received by the market.

Landlords continued to offer rent concessions in negotiations to attract higher-quality brands. Urban rents recorded a slight decline, registering at -0.4% q-o-q (-5.1% y-o-y), while Suburban rents dropped by 0.6% q-o-q (-6.4% y-o-y).

“By end-2023, we expect a total of 900,000 sqm of new retail supply to launch in Beijing. Currently, the progress of pre-leasing of the higher-quality projects is solid. The new wave of supply is not likely to push up the market vacancy level, but may weigh on rent recovery in the second half of the year,” said Ji Ming, Research Director for JLL North China.


Industrial 1Q23
Vacancy 6.3%
New Supply 104,366 sqm
Rental Growth 1.3% q-o-q

Demand further grew and Pinggu became the most active submarket in the first quarter. Leasing demand became more active in 1Q23, with economic recovery notably benefiting the market after the relaxation of China’s Covid-19 restrictions at the end of 2022. Several new leases of over 10,000 sqm area each were completed in 1Q23. New leasing activities were mainly from logistics companies, 3PLs and cold chain demand from e-commerce and healthcare companies. Demand growth was significant in the Pinggu district, which outperformed other submarkets.

For supply, two new projects, with a total GFA of 104,366 sqm, entered the market in 1Q23. However, absorption level at the new projects diverged. One of the best performing new projects was reported to enter the market with 90% pre-leasing rate. The overall vacancy rate increased slightly for 0.5-ppt to 6.3% in 1Q23 mainly because of the influx of new projects in the quarter.

Rents continued to grow, supported by active demand. Overall rent growth maintained a modest growth trend in 1Q23, rising 1.3% q-o-q, and 5.0% y-o-y. Active demand has offset new supply pressure, keeping rents rising steadily. The majority of projects continued to show stable rent growth, whilst projects that were nearly fully occupied increased their rent level more aggressively. “In 2023, expansion in market size will bring incremental opportunities to the city,” said Mi Yang, Head of Research for JLL North China. “In 2023, 464,093 sqm of new supply is expected to enter the market. Although year 2023 is expected to mark the new supply peak of the decade, overall demand remains strong, resulting in a just slight increase in vacancy rate, up 1.7 ppts to 8% by end-2023.” The year of 2023 will be a turning point for Beijing’s logistics market structure as the notable expansion in market size will further release pent-up demand that had previously been restrained by the limited supply. 

High-end Residential

Luxury Apartments 1Q23
New Supply 2,048 units
Capital Values Growth 0.2% q-o-q
Rental Growth 0.3% q-o-q

Housing sales climbed as pent-up demand released. Due to improving market sentiment and increasing supply, high-end sales showed a trend of recovery. Despite the impact of the Chinese New year – which is the low season in the housing market, a total of 1,383 luxury apartment units were sold, up a significant 20.3% q-o-q. Accordingly, the growing sales of top-quality projects in core locations pushed average price to rise by 0.2% q-o-q. Leasing market activities increased after the Chinese New Year, resulting in a slight increase in rents (up 0.3% q-o-q).

The high-end residential market in Beijing is expected to remain active. As new supply continues to launch actively, high-quality projects in prime locations are expected to attract an increasing number of buyers. Sales volume is expected to remain high in the short-term. “The 2023 government work report emphasizes the need to support rigid and improved housing demand. This, coupled with the accelerated enforcement of existing favourable policies, further enhanced the optimistic expectations of the market, which will support the continuous release of housing demand,” said Mi Yang. “High activity in the market is expected to drive a short-term rise in prices. However, considering that the main tone of maintaining market stability remains unchanged, price growth is forecast to remain moderate in the long-term.”

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $20.9 billion, operations in over 80 countries and a global workforce of more than 103,000 as of December 31, 2022. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit