Relations between the US and China are dire, soured by spying allegations and arrests. In recent days, the twitchy superpowers have closed consulates in Chengdu and Houston. It is appropriate that office closures point to the latest sector hurt by the tensions: commercial real estate.
Office vacancies in China’s big cities rose to their highest in over a decade in the second quarter. For prime locations in Shanghai and Shenzhen, voids accounted for a fifth or more of stock, according to property consultants CBRE. Even before the pandemic, the slowing economy had created overcapacity.
Coronavirus has forced further retrenchment among office-sharing companies, such as WeWork China, which accounted for over a tenth of new leases of prime offices last year. Now multinational companies are delaying lease renewals as tensions mount between China and the US.