Shanghai Tower rentals reflect confidence in country

The unexpectedly high occupancy rate at Shanghai Tower, China's tallest skyscraper, is a snapshot of foreign companies' unchanged confidence in the country amid its continued efforts in further opening up, said officials and industry experts.

About 80 percent of the office space at the 632-meter-tall building has been rented out so far, while the occupancy rate of commercial space is as high as 98 percent, said Yan Ming, deputy general manager of Shanghai Tower Construction & Development Co.

While the world economy has faced many headwinds since the COVID-19 pandemic started in early 2020, the rental performance at Shanghai Tower has bucked the trend. Located in Lujiazui, the financial hub in eastern Shanghai, the landmark building has seen nearly 60,000 square meters of its office space rented by 78 tenants over the past two-and-a-half years, said Yan.

Foreign companies now account for 41 percent of the leased space, while the rate was only 9 percent at the beginning of 2019. About 30 percent of the building's tenants are Fortune 500 companies, Yan added.

The presence of international industry leaders, such as JP Morgan and Allianz, has demonstrated foreign companies' strong confidence in the Chinese market, which is inseparable from China's continued efforts to advance higher-level opening-up, he said.

At the tone-setting Central Economic Work Conference in mid-December, attracting and utilizing foreign capital through greater efforts was listed as one of the priorities on the country's economic agenda.

Financial companies account for a significant proportion of Shanghai Tower's tenants, a large number of which are planning to increase their rented space mainly prompted by the nation's efforts toward greater opening-up, said Yan.

BNP Paribas, which rented 8,700-sq-m of office space in the building at the end of last year, is already preparing to rent more space in this landmark building, according to the French bank's China CEO C.G. Lai.

Being located in Lujiazui is crucial as BNP Paribas is aiming to increase its investment in China and seek substantial growth there, said Lai.

JP Morgan rented 8,000 sq m when it relocated to Shanghai Tower at the beginning of 2019, and its office space there has now increased to 26,000 sq m, as the company expands its business in China by acquiring business licenses for commercial banking, securities and futures in the country.

Leading International financial companies deciding to locate in Lujiazui can also be attributed to the mature industrial chain already built in the area, said Yan.

The world's top three asset management companies — BlackRock, Vanguard and Fidelity International — have all set up offices in Lujiazui.

Lu Yan, head of research for real estate service provider CBRE in China, said that Lujiazui now accommodates more than 6,000 financial companies from home and abroad, as well as the regional headquarters of 120 multinational companies. About 70 percent of finance leasing companies, asset management companies, banks and insurers first choose Lujiazui if they wish to set up businesses in Shanghai, she said.

According to the Shanghai Municipal Commission of Commerce, the city was home to the regional headquarters of 877 multinational companies by the end of September, up 64 percent from late 2015.

About 86.6 percent of the commercial buildings in Lujiazui have been rented out so far, according to CBRE.

"Lujiazui is the best place for financial institutions to grow their business in China," said Lu.