While "we'll see" is the common answer one gets when asking how the financial crisis is affecting real estate markets, in the case of office spaces, the numbers seem to be slowly adding up into a telling story. A China Daily article I recently read says days are gloomy for Grade A offices.

In the article, Albert Lau, managing director of Savills Property Services, states that vacancy rates in Grade A office buildings soared to 15.4 percent at the close of 2008, as high as 25.6 percent (50 percent in some high-end buildings according to Chinastakes.com) in Pudong which was the site of 74 percent of the new Grade A supply last year. That's 619,000 sq. meters of new office space in Pudong alone, only 366,000 of which were actually utilized.

The oversupply has caused a drop in rents, the latter stooping to below RMB8 per sq. meter at the end of the year. Though many development companies are putting the breaks on, those projects which were already nearing completion will be adding more fuel to the fire in 2009.