KCRE

RENTS for Shanghai's Grade A offices dropped the most in a decade last year and will continue its downward spiral in 2010 amid a record supply, according to latest research.

For the whole of 2009, rents for the city's top grade offices, including in Pudong and Puxi, plunged 16.3 percent to about 6.60 yuan (97 US cents) per square meter per day, the largest annual drop in about 10 years.

The record supply this year will drag down rents further, probably between 8 and 12 percent.

A separate research released by Colliers International found that Grade A office rents dived 18.5 percent in 2009 to 6.80 yuan per square meter per day and would further fall to 6.20 yuan per square meter per day by the end of 2010.

The city saw vacant areas soar to about 500,000 square meters by the end of 2009 from some 380,000 square meters at the end of 2008.

The city's Grade A office market, with a current stock of about 4 million square meters, won't likely see a major rebound at least in the coming 12 months as a result of oversupply, analysts said.
Over the past few years, the local supply of Grade A office space hovered about 400,000 square meters on average. The supply will peak this year and likely remain high at 600,000 to 700,000 square meters in 2011.