Shanghai- Home to ‘The Bund’
Today we are in Shanghai, a city with more skyscrapers over 150m that New York, London and Dubai combined, the true vertical capital of Asia.
Shanghai is where the 267 mph Maglev train was built and home to the “Museum of International Architecture” The Bund, 52 colonial era European style buildings where you can see Gothic, Baroque, Art Deco and Neoclassical facades in one block along the Huangpu River.
Shanghai is one of Asia’s most mature and competitive flexible workspace markets, driven by multinationals, finance, tech, and global supply‑chain firms. A mix of global brands and strong domestic operators like Atlas Workspace, Naked Hub and The Executive Centre provide options to the demand from tech, AI, robotic and semiconductor firms, multinationals and finance, fintech and professional services firms. There is also a growing demand in foreign investment now confidence in China grows.
Demand is around Lujiazui, Jing’an & Xuhui with a big hospitality and ESG focus in this market.
Lujiazui serviced office market is favoured by tenants due to the declining rents and relatively high overall office vacancy at 20%+ Even with that demand for flexible space in Shanghai but within a weak landlord market. Demand is mainly driven by financial & professional service firms but there has been a noticeable change in profile with domestic companies replacing multinationals.
Jing’an flex market is more diversified and resilient than Lujiazui while still being oversupplied with high vacancy. The only saving grace being the higher quality stock of buildings. Demand here is driven by SME and creative occupiers drawn by the enhanced retail, F+B and lifestyle offering along with strong ex-pat community.
The Xuhui serviced office market is an emerging part of the core and driven by demand from the innovation sector. Significant new pipeline is approved totally 2 million sq.ft and the area has seen major net absorption growth, especially around the riverside area. Sitting between Luijazui and Jing’an Xuhui is arguably the fastest evolving flexible serviced office market in Shanghai. The Riverside in particular is seeing rapid migration of corporate occupiers given the newer buildings, lower rents than central CBD and larger open floorplates.
The future of service office in Shanghai is structurally positive but operationally challenging. Demand will continue to grow, drive by hybrid work and shorter lease commitments, hybrid work models, cost optimisation by corporates, expansion of domestic firms and SMEs and sector growth across tech, finance and professional services.
Flexible workspace in Shanghai is no longer niche, its core estate infrastructure. However, the market will be shaped by oversupply meaning high vacancy and dropping rents. That does however all serviced office operators entering Shanghai to benefit from lower entry costs but facing issues around pricing, high competition and volatile occupancy with the “new thing” just around the corner. Interesting times and one to watch!