FUTURE HUBS An Inevitable Evolution
As Asia’s economies grow in stature and sophistication and companies grapple to establish a presence in its cities, it is only natural that space at its conventional business districts would reach its limits. While cost rationalization is a key objective for corporates to relocate to the periphery, within these objectives, greater mobility due to the build-out of infrastructure networks is making secondary oce markets more viable. The emergence of a well-defined decentralized Grade A oce market is the next step in the evolution of the region’s hubs.
Shanghai: New CBDs Shanghai, mainland China’s financial center, is evolving rapidly. As the city’s breakneck development has turned its core CBD areas into mature hubs of Grade A oce space, new business districts are emerging in decentralized or non-core locations to accommodate the growing needs of domestic and foreign firms. Shanghai’s traditional downtown submarkets of Lujiazui, New Huangpu, Jing’an and Xuhui are experiencing tight availability rates – in the case of Lujiazui, the center for banking and financial services, at just 3.4%. The other CBD areas cater to a more diverse mix of domestic and MNC tenants, including companies in the consulting, professional services, legal
and retail sectors. For the most part, available space in these submarkets is also quite constrained and as Shanghai’s service sector continues to grow at a blistering pace, demand should continue to spill over into the emerging CBDs where the bulk of new high-quality oce space will come on stream, as well as the business parks that surround the city’s core. Some 90 million sf of Grade A oce space is projected to launch in Shanghai during the second half of 2016 through 2021, more than doubling the current supply. The majority of this (57 million sf) will hit the market in suburban or decentralized areas
of Shanghai. Municipal government plans call for intensive development of key emerging CBD areas such as the Hongqiao Central Business District, the North Bund area, and the Qiantan International Business Zone. Of these, the Qiantan zone located south of the former World Expo site is perhaps the most promising alternative location to Lujiazui. Still in the early phases of development, the well-connected zone is within easy reach of downtown Lujiazui and will be home to major mixed-use complexes from developers including, Swire Properties and Tishman Speyer.
40 ASIA PACIFIC BFSI OUTLOOK 2017
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