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Return to Office Recovery in 2023: Greater China Top Office Supply/Demand Trends Report 2023

Mandy Qian • 16/03/2023
Cushman & Wakefield today released its annual Greater China Top Office Supply/Demand Trends report. According to the report, by end of Q4 2022, the total Grade A office inventory in the core markets of the 21 major cities in Greater China that the firm tracks totaled 65.3 million sq m. In the meantime, total premium core city office net absorption across the Greater China market for the whole year was 1.0 million sq m, a decrease of 74.3% when compared to the figure registered at the end of Q4 2021.
Among the six major cities in the region, Taipei registered the lowest vacancy rate, at 2.8%. As for the tier-2 city group, Hangzhou recorded the lowest vacancy rate at 16.6% among our tracked city markets in Greater China.
Shaun Brodie, Head of Research, East China & Greater China Content, Cushman & Wakefield said, “The volume of quality office supply in many cities in Greater China is expected to enter a peak period this year. Between 2023-2026, much of the future supply expected to complete will land in suburban locations, which will continue to drive decentralization as a number of tenants seek quality space at a discounted rental.” 
Jonathan Wei, President, Head of Project and Occupier Services, China, Cushman & Wakefield, said, “Looking to the year ahead, considering the economy, policy direction and COVID-19 control relaxation in mainland China, we believe overall prime office demand will be more resilient than last year in Greater China.”
In particular, certain industry sectors have seen new business opportunities of late or have the potential to realize business growth, given recent governmental policy directives and recent commercial, societal and lifestyle changes. These industry sectors are:
  • Technology, media, and telecommunications (TMT)
  • Life sciences 
  • Trading 
Into 2023, Cushman & Wakefield expects a number of factors, including the state of the general economy, government policy and individual city initiatives, to help drive demand. 
Beijing Market
In 2022, Beijing's Grade A office new supply dropped 32.1% year-on-year (y-o-y) to 423,858 sq m. A total of nine Grade A office buildings completed in the market, the same number of completions as seen in 2021.
Impacted by the pandemic, downward economic pressure, and uncertainty in the external environment in 2022, market activity decreased significantly in Beijing. Thus, the annual net absorption for the Grade A office market in the city was 173,000 sq m, down 79.4% y-o-y. The TMT, finance and professional services industries still ranked in the top three in terms of the leasing transactions by area. These industry sectors accounted for 43.2%, 25.0% and 13.6% of total Grade A office leasing transaction activity, respectively in Beijing in 2022.
With the relaxation of the epidemic control measures and the rapid release of economic activity, the city’s Grade A office market is expected to gradually recover. Both supply and demand are expected to increase significantly compared to 2022. About 2.1 million sq m of new office space is expected to be ushered in over the next three years. The influx of new space will continue to exert pressure on landlords. Subsequently, market rental will still face some downward pressure in the short term, which should provide tenants with a favorable window of opportunity for lease negotiation.
Shanghai Market
In 2022, the Shanghai Grade A office market was greatly impacted by the outbreak of the COVID-19 virus. Still, much new supply entered the city’s non-core submarkets, helping the total stock of Grade A office to surpass 15 million sq m.
Meanwhile, market transaction volume slowed. The annual net absorption figure for the Grade A office market in Shanghai reached 625,725 sq m, a smaller figure than the one recorded in 2021. Throughout the year, professional services, TMT and finance still led the industry sectors in the volume of transactions by area stakes with a market share of 23.8%, 17.4% and 17.4%, respectively.
In the future, with the greater adoption and implementation of more advanced technologies in AI and the Internet, the digital economy is expected to continue to bring changes to many industries in Shanghai. Some of the industries which are expected to see related transformative new business opportunities are trading, education, life sciences, media, marketing, fintech, asset management, new retail, high-end manufacturing and modern logistics.
Additionally, many office projects delayed by previous COVID-19 epidemic outbreaks are scheduled to enter the market this year. These projects are likely to add more than 2 million sq m of quality supply. Lastly, in terms of market revival, gradually recovering from the COVID-19 epidemic outbreak in 2022, this year, Shanghai is aiming to encourage a greater influx of capital to support the office economy in the city. 
Shenzhen Market
Shenzhen welcomed 597,950 sq m of prime new office supply in 2022, with Futian CBD and Houhai adding 130,000 sq m, respectively. Supply in Qianhai made up the remaining new supply share of 56.5%.
In terms of demand, the annual Grade A office net absorption totaled 221,608 sq m, a drop of 66.3% when compared to the figure achieved in 2021. Subsequently, the citywide vacancy rate climbed 3.6 percentage points y-o-y to 22.8% and the average rent declined 3.3% y-o-y to record RMB 203.5 per sq m per month. 
The finance, TMT and professional services industries remained key drivers of leasing demand, although with changing market shares. The finance sector, which took a 36.5% share of the total leased area in 2022 was up 10.9 percentage points y-o-y. Meanwhile, on an annual basis, TMT dropped 15.1 percentage points while the professional services sector was up 5.9 percentage points. 
New supply in the pipeline for 2023 is expected to reach 1.3 million sq m, bringing on considerable supply pressure. As borders further reopen, the market will witness a further rebound in business activity, which will help out in the recovery of Shenzhen’s economy and bring support to the degree of office demand. 
Guangzhou Market
Six new projects completed in 2022, bringing over 416,953 sq m of office space to the Guangzhou’s Grade A office market. This new supply expanded the citywide Grade A office market stock to 6.03 million sq m.
During the past year, the recurrence of the COVID-19 epidemic in major cities in mainland China brought great challenges to economic development and urban operations. Enterprises turned cautious on expansion plans, with renewal and relocations driven by cost control largely responsible for much leasing activity. In 2022, weaker demand in Guangzhou placed the city’s annual net absorption figure into negative territory.
Domestic enterprises were still the main drivers for transaction activity in Guangzhou’s Grade A office market, with a 72.6% share of total transactions by area in 2022. Meanwhile, professional services took a 28.4% of leasing activity by area, growing 15.1 percentage points y-o-y.
Ahead, approximately 3.7 million sq m of new supply is scheduled to complete during the next five years. The return of market participant confidence will be the key to promoting the resumption of market activity and vitality.
Hong Kong Market
In 2022, the Hong Kong market saw six new Grade A office building completions. All were located in city’s non-core areas. The six projects added 266,500 sq m and went some way to lift the overall availability rate to 16.7% by end-2022; this from 13.6% at end-2021. At 23,300 sq m and driven by take up in new completions, Grade A office net absorption in Hong Kong for 2022 rebounded back to positive territory. This was after two consecutive years of negative net absorption.
Continuing on the demand side and in line with previous years, the finance and professional services sectors continued to dominate the leasing market by total newly leased area in 2022. In addition, the Hong Kong Grade A office market also saw emerging demand from the public sector in 2022.
With the border fully reopened and most COVID-19 pandemic restrictions relaxed in the city, overall business sentiment is expected to improve along with a gradual return of demand from mainland firms. This returned demand is expected to result in office rental decline to narrow and then stabilize in 2023.
Taipei Market
In 2022, only one quality Grade A office building, E.SUN Second Headquarters, was launched. The new supply added 28,800 sq m to the Taipei Grade A office market.
The full-year net absorption in the city’s Grade A office leasing market reached 35,200 sq m in 2022. The leasing transactions were predominantly small- and medium-sized areas, averaging 2,100 sq m per deal.
By 2025, approximately 330,000 sq m of future Grade A office supply is expected to complete in Taipei, equating to about 13% of the exiting stock. A trend to upgrade hardware in older A-grade office buildings in core areas will emerge due to intense competition and company emphasis on achieving ESG goals. Businesses in the office market will prioritize Grade A offices with flexible space usage and sustainable features.
Please click here to download the full report.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms in the world, with approximately 52,000 employees in over 400 offices and 60 countries. In Greater China, a network of 23 offices serves local markets across the region, earning recognition and winning multiple awards for industry-leading performance. In 2022, the firm had revenue of $10.1 billion across core services including valuation, consulting, project & development services, capital markets, project & occupier services, industrial & logistics, retail and others. To learn more, visit or follow @CushWake on Twitter.

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