SHANGHAI

TMT IN THE CITY

Shanghai’s core CBDs are attracting a new wave of tenants from the technology, media and telecommunication (TMT) sectors

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As Shanghai’s economy evolves, demand for technological innovation, media services and telecom infrastructure, has been growing rapidly, driven by the need to add value through manufacturing and improved efficiency. TMT expansion is also driven by the maturing nature of the business environment in Shanghai, which is boosting demand for office space in the city. Between 2007 and 2015, Shanghai office take-up by TMT firms jumped 75%, an impressive growth rate compared to the 25.7% growth in the finance, insurance and real estate services (FIRE) sector in the same period.

NUMBER OF EMPLOYEES IN THE TMT SECTOR

We have seen domestic TMT companies take up a huge amount of space in their rapid expansion, including global success stories, such as Xiaomi and Alibaba, which quickly grew from start-ups to household names. International TMT giants have also strengthened their presence in the city through organic growth, as well as mergers and acquisitions in recent years.

Owing to a supply shortage in the core CBDs, the fast- emerging TMT sectors are also driving office space consolidation and decentralisation. Technology and telecom companies are increasingly turning to the business parks in new industrial clusters, such as Daning, Jinqiao, Linkong and Wujiaochang, thanks to rental price sensitivity, proximity to competitors and government incentives. However, a number of large media groups prefer to maintain a presence in higher-rent Grade-A office buildings in core locations to help attract and retain talent.

As the market has become more mature and competitive, the rapid expansion has also driven consolidation in some industries, such as media, with some enterprises targeting pre-leasing opportunities. Last year, for example, international media group WPP relocated its 26 subsidiaries to the WPP Campus in the New Jing’an District, occupying 41,000 sq m. Also, advertising and public relations company Publicis Groupe and its subsidiaries moved into Henderson 688 in Jing’an District, taking about 11,000 sq m.

Looking ahead, as Shanghai has ambitions to become a science and technology centre, we expect government- backed incubators to generate more office demand in both traditional hi-tech districts and emerging CBD areas. The TMT sectors will take a bigger slice of the employment pool and should take up around 15% of Shanghai’s total office stock by 2020, making it an even more influential sector of the market. 


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