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Demand for CBD space is still healthy: official

By Lan Tian and Wang Sujuan (China Daily)
Updated: 2009-07-27 07:40

The global economic crisis has had little impact on Beijing's central business district (CBD), but limited space in the financial hub is hampering development, said officials.

Currently, 80 percent of office space in the CBD's 77 buildings is rented out and more than 90 percent of space in high-end buildings - including China World Trade Center and Fortune Plaza - is occupied, said Liu Chuncheng, executive deputy director of Beijing CBD Administration Committee.

Liu added that rents had not fallen in the CBD, which occupies 3.99 sq km near the city's East 3rd Ring Road.

The area is home to much of the city's finance, media and business services sector and was established by the government eight years ago.

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Some reports pointed out that multinational companies, including Kodak and Motorola, had moved out in apparent cost-cutting measures with experts predicting the area's vacancy rate would rise to 40 percent this year.

However, Liu said the reports were inaccurate.

"Yes, some companies like Kodak and Motorola moved their offices out of a CBD building, but then they moved into another CBD buildings where the rent was cheaper," Liu said.

Wu Guiying, vice governor of Chaoyang district, where the CBD is located, said the financial crisis was having little impact. A shortage of land was more of a problem.

"It directly leads to congested traffic and a short supply of office space," she said.

The Beijing CBD Administration Committee said that in the first half of the year, more than 1,000 companies were registered in the area. Seven Fortune 500 companies, including Luxembourg-based steel giant ArcelorMittal, had set up offices there.

According to real estate management and consulting firm Savills, the A-grade office vacancy rate in Beijing was 19.4 percent in the first quarter, up 3.9 percent on last year.

Savills predicted that the vacancy rate would remain around 20 percent.