Amid economic challenges and reduced occupier demand in 2024, office landlords adopted flexible pricing strategies, resulting in the steepest rental plunge on record. Overall Grade A rent declined by 16.1% for the full year, which accelerated from the -8.0% y-o-y drop in 2023. This trend of declining rents across the market sparked a temporary uptick in leasing activity, stimulating tenants into seeking more cost-effective relocation opportunities. As a result, total Grade A office leasing transaction volume rose by 22% y-o-y. Of which, large-sized transaction volume (more than 10,000 sqm) was up 30% from 2023.

Figure 1: Beijing Grade A office leasing transaction volume (2021-2024)

Source: JLL Research, 4Q24

The Beijing logistics market has been struggling with various challenges, including economic volatility combined with a large amount of upcoming supply. These factors have driven a cyclical change from a landlord market to a tenant market during the past couple of years. Cautious tenants have led to a visible increase in the number of tenants relocating from Beijing to Langfang or Tianjin to reduce leasing costs. In the overall market, the challenging conditions have led overall vacancy to trend higher and hover around 18.2%.

However, the core sub-markets, such as Beijing Airport Logistics Park and Tongzhou Logistics Park, are more defensive amid the downturn. With 83% of the new supply from 2025 to 2027 to be located in the Pinggu sub-market, other core and mature sub-market fundamentals remain sound given the prime locations and steady demand from 3PL operators and emerging demand from manufacturers.

Looking forward, governments are expected to exert more effort on fiscal and monetary strategies to provide support to local businesses and consumers in an attempt to bolster economic growth, which could serve as a boost of confidence to Beijing’s commercial real estate markets.