News release

Domestic finance and IT office leasing activity drives largest quarterly net absorption figure since 2018

According to JLL Beijing’s 3Q21 Property Market Review

October 14, 2021

Kyrah Cheng

Head of Marketing, North China
+86 10 5922 1385

Beijing, 14 October 2021 – “Office leasing demand makes strides in recovery, sending another positive signal to the market,” said Julien Zhang, Managing Director for JLL North China. “Meanwhile, the long-anticipated opening of Universal Studios Beijing was met with great enthusiasm as visitors flocked to the site in huge swathes.”

In the office market, domestic finance and IT companies remained the most active, driving a notable amount of leasing activity in the quarter. Investors were focused on business parks in the quarter, while the Shimao Gongsan shopping mall in the commercial Gongti Sanlitun area was finally sold in the quarter. In the retail market, home furniture retailers actively expanded at high-end positioned malls, and entertainment tenants planned new locations across the city. Meanwhile, the logistics market continued to be stable. Supported by steady demand, luxury apartment prices recorded modest q-o-q growth.

Grade A Office

Office 3Q21
Vacancy 12.7%
New Supply 210,000 sqm
Rental Growth -0.4% q-o-q

Leasable net absorption recorded a notable increase, recording its highest quarterly level since 2018. Following soft demand from Covid-19 in 2020, the market recovery trend observed from the beginning of 2021 continued to strengthen in the quarter. Domestic firms continued to dominate the leasing the market. The finance and IT industries served as the main drivers of demand, while the professional services sector was also active in certain submarkets such as the CBD and East Chang’an.

As recovery demand persisted, destocking occurred at a faster pace, leading the overall vacancy rate to further decrease to 12.7%. Landlords continued to view the sliding vacancy rate as a further positive signal. Meanwhile, overall rents showed a more modest drop in the quarter, recording -0.4% q-o-q growth in 3Q21. While rents remained in decline across the city, there were still landlords at stable projects with high occupancy rates who managed to leverage their bargaining power to raise rents. “As overall rents start to flatten out, more landlords with steady performance will become better-positioned to push for rent increases,” said Michael Zhang, Director of Office Leasing for JLL Beijing. “This is expected to lead many tenants to take advantage of some of the last tenant-favourable leasing opportunities for 2021 in the final months of the year – before 2022 gets underway, when market rents are predicted to see more upward momentum.”


Business parks continued to garner strong interest in the market, with self-use buyers and institutional investors most active in seeking such assets. In the quarter, Mitsubishi acquired a partial interest in Diamond Plaza from ACR Asset Management, which had just recently purchased the property in Zhongguancun Software Park in 2Q21. Meanwhile, several business park buildings were sold to IT companies for self-use in the Shangdi and Fengtai areas.

The office sector remained hugely popular among investors, but acquisitions in other sectors attracted more attention in the quarter. Following years of failed efforts to sell, the 82,340-sqm Shimao Gongsan mall was finally sold in the quarter via a judicial sale for RMB 1.65 billion. Just a short distance from the wildly popular Taikoo Li project, the complex is among disgraced LeTV founder Jia Yueting’s assets that have been frozen and are being sold by the courts to recover his debts. Meanwhile, data centres continued to contribute to the sales volume, with GDS announcing further purchases in Beijing with 100% occupancy rates. “As the end of 2021 nears, we see a number of investors still keen on working to close deals and take advantage of the opportunities currently presenting themselves in the market,” said Michael Wang, Senior Director of Capital Markets for JLL North China. “As such, we can expect more negotiations to push through and add to the full-year transaction volume for Beijing in the remaining months of the year.” 

Prime Retail

Office 3Q21
Vacancy 5.6%
New Supply 105,000 sqm
Rental Growth -0.6% q-o-q

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

Furniture brands expanded at high-end positioned malls, with FNJI and Tales among those committing to new locations in the quarter. Landlords showed great interest in introducing these retailers as furniture brands require larger spaces and widen existing tenant mixes. Entertainment retailers were also active. KTV operators planned to open multiple stores, including K Show at Capitaland Mall Taiyanggong and V Show at Topwin. Meanwhile, children’s education retailers faced challenges from the recent policy restriction on curriculum-related tutoring; a number of these tenants remained close in the quarter due to restrictions on operating hours. Children’s art and sports retailers continued operations, however, but are expected to hold a more conservative approach to expansion.

The highly anticipated Universal Studios Beijing opened in the quarter in Tongzhou District, offering eager visitors the chance to descend upon the popular US brand’s first theme park and resort in China. The mega-entertainment and retail complex drew huge excitement in the market, reportedly drawing 25,000 daily visitors over the week-long October holiday. “Given the enormous attraction of Universal Studios Beijing, we expect the park to continue serving as a big draw for tourists to the city and especially to the area,” said Ji Ming, Research Director for JLL Beijing. “In tandem, this will provide an added boost to the overall retail market, not only as a strong magnet for visitors, but also as it significantly raises the level of retail offerings in the city, along with its prestige as a major entertainment destination.” 


Industrial 3Q21
Vacancy 4.9%
New Supply 0 sqm
Rental Growth 0.8% q-o-q

Leasing inquiries from the usual demand sources were active in the quarter as demand recovery continued to progress and the market remained stable. Landlords were still interested in strategies to accommodate tenants looking for cold-chain storage. At the same time, many landlords had limited or less preferable space available for lease in the quarter, making it difficult for some to satisfy various requirements from tenants. The overall vacancy rate dipped back down just below the 5.0%-mark to 4.9% in the quarter, after a number of landlords filled much of their remaining vacant spaces.

Overall rent growth remained stable in the quarter, with rents continuing to slowly inch upwards across submarkets. Overall rents grew 0.8% q-o-q. Landlords with very stable projects used opportunities that became available to them to push for slight gains where possible. Meanwhile, the market is expected to hold steady through year-end. “Despite more than 300,000 sqm of supply projected to come online by end-2021, the overall vacancy rate is not predicted to see a huge jump as a notable proportion of the space is reserved for self-use while a significant amount of the remaining space is not predicted to enter the market vacant,” said Mi Yang, Head of Research for JLL North China. “Without too much pressure additional supply pressure expected in the last months of the year, overall rents are set to maintain their modest growth trend.” 

High-end Residential

Residential 3Q21
Luxury Apartments
New Supply 2,192 units
Capital Values Growth 1.6% q-o-q
Rental Growth 0.2% q-o-q
High-end Villas
New Supply 0 units
Capital Values Growth 1.5% q-o-q
Rental Growth 0.2% q-o-q

Sales demand continued to be strong in the quarter, with buyers attracted to the variety of new supply and stable market expectations. A total of 867 luxury apartment units were sold in the quarter, up 3.3% q-o-q. Luxury apartment prices grew 1.6% q-o-q on a like-for-like basis; growth was supported by steady demand as housing policies in Beijing held steady. In the high-end leasing market, rents were flat, but remained on a positive growth trajectory due to the recovery in demand.

Uncertainty in liquidity may cool sales momentum to some degree towards the end of the year. However, as developers typically unleash a series of sales mechanisms to boost demand in the fourth quarter, we expect the sales volume to remain at a relatively high level through end-2021. “Meanwhile, future land supply is expected see increasingly stricter regulations to echo the tight policies intended to further curb speculation in the housing market,” said Yang. “This is projected to support moderate and healthy price growth in the primary high-end market.” 

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 $16.6 billion in 2020, operations in over 80 countries and a global workforce of more than 92,000 as of June 30, 2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit