Renewed demand for global and regional R&D centers and campus-style headquarters since the end of the global recession has fueled business park growth as foreign and Chinese companies increase efforts to expand in China, according to a Jones Lang LaSalle report.
“While the business park market is continuously developing in Shanghai, its neighboring cities are attracting more attention from both domestic and foreign companies due to their low land cost, accurate market positioning, and complete supporting facilities,” Tammy Tang, Head of Business Parks and Consultancy for Jones Lang LaSalle China, said.
Currently, the average rental among business parks in Shanghai has reached RMB3.40 per sqm per day, doubling that of its neighboring cities. These higher rental costs have scared away many prospective companies, leading them to consider setting up their operations in the newly emerging cities around Shanghai instead.
In comparison to the business park zones in Shanghai, the newly emerging nearby cities are adapting their economic structures and upgrading infrastructural facilities. City governments have also offered incentives for companies to relocate specific business functions to these parks, particularly in the perceived high-growth sectors such as R&D centers, customer experience centers, training centers, call centers, and data centers, the report noted.
“Many business parks are still in the ‘industry park zone’ era, relying mainly on providing factory buildings to manufacturing companies. Integrating the diversified functions of industrialization and urbanization is the only way to drive the future development of park zones,” Tang added.
The report cited Taicang Science & Education New Town as an example of a town in the Yangtze River Delta that offers attractive policy support. Focusing on cultural industries and innovation for its growth, the Town has provided a package of industry incentive policies including financial support and talent introduction.
With ever-growing market interest in the Yangtze River Delta area and the geographical advantages of being adjacent to Shanghai, the report added that it strongly believes the investment potential of the newly emerging nearby cities will be increasingly tapped and improved in the future.