The state-owned developer of what will be China's tallest building is taking the unusual step of moving to hire a leasing agent, underscoring the challenges of finding tenants as the country's economy cools.
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., Shanghai Lujiazui Finance & Trade Zone Development Co. and Shanghai Construction Group Co.--is planning to hire a leasing agent, an unorthodox step in China, particularly for a state-owned developer.
The plan was confirmed in an e-mail to The Wall Street Journal from Grace Zhu, Shanghai Tower's marketing director. She said that the developer has started to interview real estate brokers.
People involved with the project say that bringing in a leasing agent is important because the developer wants to attract major financial institutions and other international tenants, not just state agencies and other domestic businesses. 'They don't want this to just be a Chinese building,' said Daniel Winey, managing principal of the Asia region for Gensler, the architecture firm that designed the building. 'If you want to attract tenants like Goldman Sachs, Morgan Stanley and Credit Suisse, you're going to need an international broker.'
Developers of office skyscrapers in western cities as well Asian financial centers like Hong Kong and Singapore typically hire firms to help determine rents and leasing strategy and canvass the world for tenants. But this practice hasn't caught on with many Chinese state-owned developers, who prefer to rely on in-house staff. Neither of the last two Shanghai office towers that held the crown as China's tallest--Shanghai World Financial Center, opened in 2008, and Jin Mao Tower, finished in 1998-used leasing agents.
The move by the developer will likely set off a competition among the world's largest real-estate companies. Shanghai Tower's developer might hire a Chinese company as leasing agent, but the consortium would most likely go with a foreign firm with more experience, experts say. It also is possible more than one leasing agent may be hired because of the building's size.
The project looms above of Shanghai's Lujiazui financial district, home to companies such as HSBC Holdings PLC, Standard Chartered PLC and Citigroup Inc. Featuring the world's fastest elevators, 21 atriums and double exterior curtain wall to conserve energy, the project is one of the most expensive office buildings ever developed.
The cost is 14.8 billion yuan ($2.4 billion) including land, according to Ms. Zhu. Dubai's Burj Khalifa cost $1.5 billion.
Shanghai has added 10 million square meters of office space since 1990, equivalent to the city of Boston. Demand continues to increase, but at a slowing rate. In 2010, the amount of space occupied by businesses increased by a record 724,507 square meters, according to Savills China Research, a real estate services firm. In the first nine months of 2013, the amount of absorption amounted to 261,178 square meters.
Meanwhile, the supply of space is increasing sharply both in downtown Shanghai and in suburban markets where developers are trying to lure tenants with lower rents. New projects are expected to add about 590,000 square meters of premium office space between 2014 and 2016, compared with 400,000 square meters from 2010 to 2013, according to data from real estate services firm Knight Frank Research.
'We don't expect rents to rise as quickly as [they] did previously, there are a lot of new buildings coming on board,' said Xia Hang, general manager at South Korea-based SK China Real Estate Co. The firm is building a 275-meter skyscraper in Houtan, a waterfront area in Shanghai.
In 2013, average office rents for top-quality space in Shanghai increased 1.5% to 13.92 yuan per square meter per day from 2012, according to data from Cushman & Wakefield China.
Experts predict that rents will be constrained as a result of new supply and competition from suburban markets.
The leasing of Shanghai Tower--which also will include a 258-room hotel and 50,000 square meters of retail space--is being watched closely as a proxy for China's economy as it goes through an era of government-led reforms targeted at putting China on a more sustainable growth path and removing barriers to foreign investment.The developers are hoping that office-space demand will be stoked by easing restrictions on the Chinese currency and the creation of three new free-trade zones in the city's port area.
The Shanghai office market has gone through several up-and-down cycles over the past quarter century. In the early 1990s, demand for space was so tight that many foreign companies had to set up shop in hotels.
Office development accelerated in 1993 when the government of then-paramount leader Deng Xiaoping encouraged the growth of the Pudong district on the eastern shore of the Huangpu River, across from the city's historic center. Pudong's Lujiazui district, which was farmland just 20 years ago, saw the biggest change.
But development has occasionally outstripped demand. In 1998, about 70% of Pudong's office buildings were vacant. Additionally, demand sharply eroded during the early years of the latest financial crisis.
Undeterred, the developer of Shanghai Tower broke ground on the project in November 2008, just two months after the collapse of Lehman Brothers Holdings Inc. Shanghai's vacancy rate declined from 16.4% in 2008 to 4.2% in 2012, but increased in 5.5% last year partly due to the new supply, according to Cushman & Wakefield China.
Many brokers predict that demand will eventually catch up with the new space being delivered. They point out that the city's office market, with 10 million square meters of top-quality space, still pales in comparison with financial centers like Manhattan, which has four times that amount.
But given Shanghai Tower's high cost it will likely take longer for the building to make money than typical office projects. Mr. Winey, the Gensler managing principal, said he doubts any private developer would ever attempt such an expensive design.
'I don't think you would attempt anything like this unless you have a 30-year plus investment horizon,' he said.
上海中心大厦的开发商包括国有企业上海城投控股股份有限公司(Shanghai Chengtou Corp.)、上海陆家嘴金融贸易区开发股份有限公司(Shanghai Lujiazui Finance & Trade Zone Development Co.)和上海建工集团股份有限公司(Shanghai Construction Group Co.)等。为了帮忙把大楼“填满”，这些公司打算招募租赁代理。这在中国可谓是离经叛道的做法，尤其对于一个国有开发商来说。
租赁代理招募计划在上海中心大厦市场销售主管Grace Zhu发给《华尔街日报》(The Wall Street Journal)的电子邮件里得到了确认。她说，开发商已经开始面试房地产经纪人。
参与项目的人说，招募租赁代理很重要，因为上海中心大厦的开发商希望吸引大型金融机构和其它国际租户，而不仅仅是吸引国家单位和其它国内企业。上海中心大厦的设计方美国建筑事务所Gensler亚洲地区管理合伙人威尼(Daniel Winey)说，他们不希望让上海中心成为一个中式大厦，如果想吸引高盛(Goldman Sachs)、摩根士丹利(Morgan Stanley)和瑞士信贷(Credit Suisse)等租户，就需要一个国际经纪人。
上海中心大厦矗立于陆家嘴金融贸易区，那里汇集了汇丰控股(HSBC Holdings PLC)、渣打集团(Standard Chartered PLC)和花旗集团(Citigroup Inc.)等众多跨国公司。上海中心配备了世界上速度最快的升降电梯、21个“空中大堂”和节能的双层建筑外 ，堪称全球造价最昂贵的写字楼之一。
自1990年以来，上海的写字楼面积增加了1,000万平方米，相当于一个波士顿市的写字楼面积。虽然需求还在增长，但增速有所放缓。房地产服务公司第一太平戴维斯中国区市场研究部(Savills China Research)的数据显示，2010年，上海写字楼吸纳量达到创纪录的724,507平方米。2013年前九个月的写字楼吸纳量为261,178平方米。
此外，上海市区和城郊的写字楼供应面积都在急剧增多，开发商试图利用更低的租金来吸引租客。根据房地产服务公司莱坊国际研究(Knight Frank Research)提供的数据，预计2014年至2016年期间新项目的推出将使高档写字楼面积增加约590,000平方米，增幅大于2010年至2013年间的400,000平方米。
总部设在韩国的SK（中国）置业集团有限公司(SK China Real Estate Co.)总经理夏航说，预计租金不会像以往涨得那样快，有大量新楼盘即将推出。该公司正在上海后滩地区建造一座高275米的摩天大楼。
高纬环球中国(Cushman & Wakefield China)提供的数据显示，2013年，上海甲级写字楼的平均租金较2012年上涨了1.5%，达到每平方米每天人民币13.92元。
即便如此，上海中心的开发商并没有被吓退，仍于2008年11月破土动工，也就是雷曼兄弟控股公司(Lehman Brothers Holdings Inc.)破产仅仅两个月后。高纬环球中国的数据显示，2012年，上海写字楼的空置率从2008年的16.4%下降至4.2%，不过2013年又升至5.5%，部分原因是供应增加。