Ecosystems serve as the new engine for Shanghai business parks

Shanghai, 25 Sep 2020 - With over 30 years of development based on a clear industrial plan, Shanghai business parks have become an essential part of Shanghai’s property market. With ample policy support, core business parks, in particular, have attracted top-grade companies, forming specialized industrial clusters. “By providing talent to target industries with suitable physical space fosters city integration, while utilizing policy as a differentiating factor to encourage density and clustering of specialized industries supports industrial gathering, we increasingly witness ecosystems taking root in business parks,” said Cathy Huang, Head of Research for JLL East China.

Industrial clusters take shape in core business parks

JLL has tracked Shanghai’s business park market since 2004. As of 2Q20, total stock in the five core business parks was 8.2 million sqm. In the recent two years, despite an economic slowdown and the impact of COVID-19, vacancy has remained stable at 15%-17%. Meanwhile, new completions entering the market have been able to keep up with demand.

According to JLL’s latest tenant survey, companies prioritized industrial gathering when choosing business parks. The other four factors include subsidies, transport and amenities, rent and lease terms, and building quality and specifications. Specialized industrial clusters have been formed in Shanghai’s core business parks, especially in Zhangjiang and Caohejing. The diversified companies present there are attracting more firms from strategic emerging industries, helping these BP submarkets contribute to making Shanghai a global science and technology center.

Tech and Healthcare sectors represent majority of demand

The tech sector along with the TMT industry chain have been rapidly expanding, especially upstream sectors like businesses involved in gaming and content app and platform companies. Meanwhile, IT solutions and software and deep-tech companies such as 5G and microchip companies also contributed significantly to demand for business parks.

Driven by talent, emerging ecosystems to boost business park development

In the long run, various players in the business park sector, such as companies, property owners, government and universities, are expected to jointly form an ecosystem. The function of business parks will expand beyond creating industrial clusters. They also cultivate emerging industries and restructure the industry chain, thereby boosting their own development and generating diversified demand.