News release

Office leasing activities dropped off after a slight uptick; four new retail projects entered the market, including Lize Sky Mall

According to JLL Beijing’s 3Q22 Property Market Review

October 11, 2022

Kyrah Cheng

Andrey Yang

+86 (10) 5922 1382

Beijing: 11 October 2022 – “Slower demand growth momentum was recorded in the office market in the quarter,” said Julien Zhang, China Chief Strategy Officer and Managing Director for North China, JLL. “SMEs were observed becoming the major leasing demand. With their development, SMEs are expected to become a new driving force for future market growth.”

In the Grade A office market, new sources of demand were limited in the third quarter. TMT companies slowed down expansions and domestic financial companies became the main driver of demand in the third quarter. In the investment market, opportunities in business parks remained highly favoured by domestic and foreign investors and self-use buyers. In the third quarter, Zhigu Building and a life science facility in Daxing were successfully sold. Demand in the retail market still experienced a slow recovery while four new malls entered the market drawing much attention. The industrial market held consistent, with a slight rent growth mainly brought about by the new project. Developers further accelerated their launches of high-end residential units as sales volume remained stable.

Grade A Office 

Office 3Q22
Vacancy 9.7%
New Supply 0 sqm
Rental Growth -0.4% q-o-q

Leasing activity dropped off after a slight uptick in late 3Q22; rents declined further as market pressures remained. Demand was tightly constrained by current market conditions. Leasing activity dropped off after an uptick at the beginning of 3Q22. Tenants, especially some large-scale companies, tended to become more cautious about making leasing decisions. In the third quarter, deals under 2,000 sqm accounted for 83% of total transactions in terms of amount. One previously strong demand pillar, the TMT sector, has witnessed a slowdown in expansions in the past several quarters. The leasing market in 3Q22 was mainly supported by domestic financial companies, which contributed half of the leasing demand.

As the leasing market cooled down in the second half of 3Q22, the quarterly net absorption saw a notable decline, recording a 70% q-o-q change. Despite weakening demand across the city, recent completions continued to fill up, slowing the downward trend of vacancy rates with a slide of only 0.1 ppts to 9.7%. The downward trend in overall rents continued, with rent growth of -0.4% q-o-q. Meanwhile, seven out of the total nine submarkets across the city reported negative rent growth. To attract tenants, some landlords became more flexible and provided rent concessions or longer rent-free periods. “With the lag effect from the Covid-19 outbreak in May 2022, we have lowered the outlook on overall rents for the fourth quarter of 2022,” said Michael Zhang, Senior Director of Office Leasing Advisory for JLL Beijing. “In 2023, rental value is still expected to increase but at a lower growth rate. Approximately 440,000 sqm of future supply will enter the market before end-2023, while net absorption is predicted to improve correspondingly to 260,000 sqm.”


Key drivers of demand in business park properties are thriving, and business parks continue to attract both domestic and foreign investors. Longfor Properties sold the Zhigu Building located in Zhongguancun Environmental Science and Technology Park to Inspur Group for self-use purposes for RMB 906 million. In addition, CBC completed the acquisition of the life science facility located at China Biomedicine Park in Daxing. The rapid development of the technology and life science industries has brought an increase in demand, and investors and enterprises looking for self-use facilities are still seeking opportunities for high-quality business park properties.

Developers are still actively disposing assets, and property transactions in non-core areas have increased. R&F Properties announced in the third quarter that it plans to sell Wanda Realm Hotel in the Shijingshan area to Beijing Yingxie Property Investment at a price of RMB 550 million. In addition, Aier Healthcare purchased Wu Huan Hotel for RMB 849 million through a judicial auction. “Although the market is facing challenges and investors are becoming more cautious of traditional office properties, properties with price advantages still attract investors.” said Jessie Xu, Operations Director, China and Head of Capital Markets, North China, JLL. “The attention to business parks, rental housing and logistics remains. Under the continuous effect of favourable factors, such as the development of REITs, Beijing’s commercial real estate market will continue to attract domestic and foreign investors and self-use property buyers.”

Prime Retail

Office 3Q22
Vacancy 7.1%
New Supply* 413,912 sqm
Rental Growth -1.3% q-o-q

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

The latest outbreak had a prolonged effect on the retail market as overall demand remained weak. Even though shopping malls had already resumed operations, the overall market experienced a slow recovery, with retail sales declining by 7.9% in July and remaining stable in August at 0.3% growth. Many fashion brands paused expansion plans following sharp revenue drops. New openings from fashion brands accounted for only 11%, compared to 18% in 2021. The recent outbreak caused a new wave of store closures and tenant withdrawals. In the third quarter, F&B stores occupying less than 100 sqm absorbed nearly 60% of all space vacated by F&B withdrawals. Among them, drinks and small snack retailers were significantly affected by the recent outbreak as they rely heavily on cash flow. Meanwhile, chained casual dining brands with stronger profitability expanded in the third quarter, pushing the percentage of F&B openings to 43%.

Four new projects opened in the third quarter, Lize Sky Mall opened at the end of September. In the Urban market, Lize Sky Mall brought more than 200 brands to the Lize area, where the retail market is underserved. Meanwhile, Big Shopping Park in Ya’Ao, a service centre in Olympic Village during the Winter Olympics, was renovated and reopened. The project focuses on sports and entertainment, introducing multiple entertainment brands that made their first appearance in Beijing, such as VLVFIT and Golfzone Range. Two projects by well-known developers have opened near Yizhuang in the suburban Daxing District. Yizhuang Longfor Paradise Walk opened with more than 300 brands, targeting nearby young customers by introducing entertainment brands such as LLJ and SKINOW. Meanwhile, Yinghai Uni Park by China Overseas, which targets families in a nearby region, introduced anchor tenants, Yonghui Superstores and Bona International Complex.

The impact from the recent outbreak put further pressure on rent growth. Landlords offered greater flexibility on rental terms, such as rent-free periods, to alleviate tenants’ financial pressure and stabilise their projects. In addition, following a sharp drop in leasing inquiries, landlords are willing to offer further rental concessions to brands that were in negotiations and new tenants. As tenants gained more negotiating power, concessions offered by landlords drove down market rents further. Urban rents recorded a moderate decline, registering -1.1% q-o-q growth (-1.8% y-o-y), while the Suburban market suffered a sharper decline, recording -1.8% q-o-q growth (-3.9% y-o-y).

“Considering that a growing number of brands have already paused or cancelled expansion plans, we expect leasing demand to remain weak for the rest of the year. Meanwhile, landlords are expected to adjust their rental expectations downward and maintain their current rent levels, as stabilizing their projects is the current priority.” said Ji Ming, Research Director for JLL North China.


Industrial 3Q22
Vacancy 5.4%
New Supply 65,558 sqm
Rental Growth 1.1% q-o-q

Absorption of surrendered areas indicates demand equilibrium. The demand structuring that consists of supply chain, e-commerce and manufacturing industries continued to be stable. Landlords actively adjusted the specificity of the tenant structure and reduced the scope of industry coverage, so that project agglomeration is stronger and tenants can realise the sharing of resources. In addition, total stock of new projects with more than 65,000 sqm entered the market in 2022, and started operations in the third quarter, and all conventional, new, high-standard warehouse projects were pre-leased before entering the market. Therefore, the vacancy rate remained healthy at 5.4% in the quarter, a slight increase of 1.3 ppts from 2Q22.

Upscale new projects boost rent growth, up 1.1% q-o-q from last quarter. The entry of new high-standard warehousing projects into the market has led to a slight increase in overall rents, illustrating the strong leasing capacity of the market. “Released land supplies deliver new opportunities,” said Mi Yang, Head of Research for JLL North China. “The capital logistics highland – the Jingping Logistics Hub – recorded three land transaction deals, totalling more than 100,000 sqm. Therefore, the Jingping area is expected to see more interest from investors and operators.”

High-end Residential

Residential 3Q22
Luxury Apartments
New Supply 1,709 units
Capital Values Growth -0.1 sqm
Rental Growth -0.2% q-o-q
High-end Villas
New Supply 0 units
Capital Values Growth -3.9% sqm
Rental Growth -0.2% q-o-q

Sales volume in the first three quarters hits its highest figure in five years. A total of 1,709 luxury apartment units were sold in 3Q22. After a small peak in the previous quarter, the sales volume in the third quarter dropped slightly, but it increased 97.1% y-o-y. Luxury apartment supply increased, with a total of 2,574 new units, up 15% q-o-q. With the arrival of the peak season in September, developers further accelerated their launches of new units.

Market sentiment is expected to continue to improve under loosening policies. Sales prices dropped slightly by 0.1% q-o-q in 3Q22. This was largely due to some developers launching promotional units, as increasing sales was still their top priority. “With the arrival of the traditional peak season, developers will further increase their deliveries to promote sales. It is expected that the new supply in the high-end residential market will remain high and drive market sentiment,” said Mi Yang, Head of Research for JLL North China. “The implementation of various favourable policies may gradually restore market confidence and further enhance buyers’ enthusiasm. High-end demand will be further released, helping the market to recover steadily.”

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 $19.4 billion, operations in over 80 countries and a global workforce of more than 102,000 as of June 30, 2022. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit