(Yicai Global) Dec. 23 -- The office vacancy rate in China’s capital city reached a 10-year high this year, depressing rents, according to new data.

The vacancy rate hit 19.4 percent in Beijing because of the coronavirus pandemic and an increase in supply, commercial real estate services firm Colliers International said on its official WeChat account yesterday.

The cost of renting office space in the city has dropped along with the increase in the vacancy rate. Monthly rent per square meter fell 8.4 percent to CNY351(USD53.65). That is the sharpest decrease in the past decade. Rents are down nearly 13 percent from their 2018 highs.

About 1.6 million sqm of new office space will be added next year, compared with over 900,000 sqm in 2019, so Colliers expects 2021 to be a challenging year for Beijing’s Grade A office building market. Rents will also continue to decline, but at a slower pace than this year.

New demand for large office space comes mainly from internet companiesthat prefer industrial parks or Grade B office buildings around the city, and seldom choose Grade A space in the city center, said Lu Ming, director of the north China research department at Colliers.

In addition to lower rental costs, the pursuit of industrial clustering is also an important motivation for tech companies to “escape from the center of Beijing,” he said. That is also the main reason why the Shangdi and Wangjing-Jiuxianqiao areas in the city’s northeast have done better than the market average since the coronavirus outbreak.

The vacancy rate of office buildings in the Wangjing-Jiuxianqiao area has fallen from about 24 percent in 2018 to 9.6 percent in the fourth quarter of this year, with 80 percent of new demand coming from internet companies.

Editor: Peter Thomas