Domestic Companies in the Grade A Office Market Four Key Occupier Trends Explained

One of the major outcomes of the considerable volatility in China’s economy and office market witnessed over the past three years has been the increasing prominence of domestic occupiers. As of the beginning of 2023, Chinese firms occupied 72% of space in Grade A office buildings in tier I cities, 12 pps higher than at the end of 2019.

As domestic companies continue to bolster their presence in the Grade A segment, CBRE’s analysis of corporate real estate strategy and leasing activity has identified four distinct trends among domestic occupiers we believe will shape China’s office leasing market this year.
 

1 – Rejuvenated major demand engines

Office leasing demand from technology and finance companies has picked up strongly since the beginning of the year, with momentum expected to grow in the coming months. Industry sub-sectors including securities firms and funds, internet data services and software development companies will be increasingly active.

2 – Robust flight-to-quality activity

The pandemic has prompted domestic companies and their employees to place a far stronger emphasis on workplace quality, leading to accelerated growth in flight-to-quality office demand.

3 – Stronger focus on space efficiency

Domestic occupiers, particularly technology and manufacturing firms, are looking to improve space efficiency to facilitate the adoption of flexible working styles.

4 - Growing requirements for green buildings

China’s carbon neutrality goals are driving the increased adoption of sustainability criteria and targets among domestic firms. This is leading to stronger demand for green buildings with features such as high energy efficiency.