A report published by commercial real estate services firm Jones Lang LaSalle (JLL) this week said that 352,000 square meters of prime office (including Grade A and Grade B) space has been added in southwest China's Chengdu City in the first half of this year, equivalent to almost all new office space added to the market last year. 

Some 67 percent of the newly-added space is of Grade A quality, the highest rank in China. And the increased supply comes from demand hikes as the region continued its faster-than-expected economic growth.  

Chinese economy had a rocky start in 2019, however, Chengdu was able to register a 8.2-percent growth in the first half – much higher than the national average growth rate of 6.3 percent. 

"Office demand in the first half has been highlighted by new economic forms, stable development of the local financial industry as well as newly-registered business entities. Macro and small to medium-sized enterprises led the demand," said Xie Ling, managing director of JLL’s Chengdu headquarters.  

According to JLL, companies from industries of technology, media and telecom, finance, and service were the biggest renters for top-graded office space. 

Yet the real estate service firm also pointed out that while smaller firms drove up the local office rental market, the second quarter saw an increasing number of lease terminations due to these firms' limited risk control abilities. 

In the meantime, office tenants are also looking for offices designed with different contextualized spaces, such as places to work, to eat, to relax and to meet visitors. Rents for quality office space remained broadly stable. At the end of the first half, rents of Chengdu's prime office space averaged to 82.9 yuan (12.1 U.S. dollars) /square meter/month, up 0.2 percent over the end of 2018.