China’s high office space vacancy sees hotel conversion shift

More economy and mid-range hotel operators in China are leasing office buildings for conversion to guest accommodation, reports the South China Morning Post. Such flexible, mixed-use approaches are expected to increase amid a continued weakening of the office market.

In some Chinese cities, the practice of multiple hotel brands co-leasing separate floors within a single building has become more prevalent, fuelled by interest from both property owners and hotel operators.

“Hotel operators are seeking lower-cost, well-located space, and office landlords are looking to reduce vacancy,” James Macdonald, head of research for China at Savills, a property consultancy, told the SCMP. “This trend is most common in grade B office assets in good locations, especially slightly older buildings where leasing to traditional office tenants has become more challenging.”