China Major Report - Innovative Beijing - Trends of CRE Strategies for TMT Occupiers 2016
The draw of Beijing to a highly skilled labor pool and its positioning as China’s technology and innovation hub have led to the clustering of the TMT industry. As such, the industry has become a major source of demand in the Beijing office market. The contribution of the TMT sector to total office net take-up in Beijing during the past three year stands at an average annual rate of around 35%, significantly exceeding that of other cities in China.
A high level of scarcity of leasable office space in Beijing’s traditional TMT cluster areas such as Zhongguancun, as well as demand from TMT tenants for large-size office spaces, have allowed office space availability to play a significant part in the movement trends of TMT firms. As a result, multiple clusters have emerged as site selection targets for TMT tenants. In consideration of attracting a highly skilled labor force, TMT firms also place a significant premium on transportation accessibility and working environment in their site selection strategy.
Given the higher volatility of headcounts, working behavior of the staff and the advancement of mobile technology, adopting shared workplace model to make office space more flexible and collaborative has been gaining increasing popularity among TMT firms.
TMT firms have been one of the major buyers of large-sized office properties in Beijing over recent years. The strategic value of real estate for TMT tenants and the favorable financing and policy environment for end-user investment are expected to further drive up investment demand from TMT firms. However, TMT firms also face challenges when making real estate investments in Beijing – lack of investable assets, and lack of professional expertise in the real estate territory.