Beijing's Grade A office rents drop

Office rental demand from international professional services and financial firms remained weak in the third quarter, a consequence of continued uncertainty in the global and domestic economies, according to a report by commercial real estate services and investment management company Jones Lang LaSalle.

Eyeing the large number of lease expirations that are expected in the remainder of the year and into 2014, landlords are eager to lock-in tenants to maintain or improve current occupancy levels.

Some landlords have reduced rents while others have offered rent-free periods or other incentives. Overall, rents fell 0.2 percent quarter-on-quarter, the report showed.

However, low vacancy rates across Beijing mean that landlords are able to retain some bargaining power in an otherwise tenant-friendly market, and a stable period in the fourth quarter is expected to be followed by a marginal recovery in 2014, according to JLL.

"Despite the continued caution from some landlords and tenants, creating relatively thin demand, we do not expect negative rental growth to be a pervasive trend in Beijing. Low vacancy rates are likely to support a minor rebound in 2014, although some landlords, particularly those in the CBD, may continue to show a degree of flexibility, " said Eric Hirsch, head of markets at JLL in Beijing.