China’s state-run real estate developers might be getting more market-oriented, or it could be that someone in the Shanghai city government realises that leasing out 220,000 square metres of office space is not a matter to be lef to chance.
In any case, the state-owned developers of the Shanghai Tower, the 2,073 foot tall building which is a showcase for the local government and the second tallest building of the world, have announced that they are seeking leasing agents to help fill the building.
According to a report in the Wall Street Journal,
The 2,073-foot Shanghai Tower—which will be the largest skyscraper in the world after the Burj Khalifa in Dubai when it is completed next year—hasn’t yet signed any leases for its 220,000 square meters (2.4 million square feet) of office space. The project is coming to market at a time when rental rates are under pressure from slipping demand and a surge of new supply.
To help fill the building, the owners—a group including state-backed entities Shanghai Chengtou Corp. 600649.SH -2.68% , Shanghai Lujiazui Finance & Trade Zone Development Co. 600663.SH -1.96% and Shanghai Construction Group Co. 600170.SH -1.18% —plan to hire a leasing agent, an unorthodox step in China, particularly for a state-owned developer.
While office rental growth in Shanghai’s Lujiazui area, where the Tower is located have been growing strongly in recent months, the overall office market in the city has softened, and there’s some concern among industry professionals that the Shanghai Tower’s debut could oversaturate the market.
(For those of you unfamiliar with the Shanghai Tower, here are some outstanding photos from the structure).
When the Shanghai World Financial Center entered the market during the middle of the financial crisis in 2008, the landlord of what was then the city’s largest building offered cut-rate rents to early tenants, effectively bringing down rents in many of the city’s grade A buildings.