(Yicai Global) July 28 -- The Grade A office building supply and vacancy rates reached their highest levels in Beijing in the first half of this year, setting a new record for the past nine years, said a market research report released by Canada-based international commercial real estate service company, Colliers International.

As the demand for commercial property and office space lagged behind the supply growth, the vacancy rate reached 8.6 percent, driving rents down in a descending trend, the report highlighted.

Li Fangyue, a lessee representative at Colliers International North China office building service, said the total building area for lease in Beijing in the first half year reached 237,000 square meters. As five new projects have been completed and have entered the Grade A office building market, the total stock is up 4 percent from the same period last year. 

The implementation of key new projects also stimulates lease and relocation demand. In the first half year, the net absorption volume of office building in Beijing reached 180,000 square meters. As the newly created supply is larger than the demand, the office building vacancy rate reached 8.6 percent, Li stated. 

However, the average rent of Grade A office building in Beijing rose to CNY332.6 (USD49) per square meter per month in the first half of the year as the rental price of new office buildings is higher than average rent. 

Li said six new office building projects with a total building area of 450,000 square meters will be completed and put into market in the second half of the year in both central business district (CBD) and emerging areas. The increased supply of office buildings this year will, therefore, hit nearly 700,000 square meters, which would be the highest annual increase in Beijing since 2008.

If all new projects are completed as scheduled the total vacancy rate by the end of this year will reach about 12 percent, Li warned, predicting this would gently drive down the average rent for office buildings in Beijing.