Foreign building managers hear sound of opportunity knocking

BEIJING - As Chinese companies embark on a wave of overseas expansion, managers of office buildings overseas are seeing an increasing number of business opportunities amid a faltering economic recovery and are flying to China to seek potential Chinese tenants.

Anthony Malkin, president of Malkin Holdings LLC, which manages the Empire State Building in New York, recently visited China to find tenants, hoping to benefit from the previous flood of Chinese buyers of commercial housing who are now spilling into the office rental market.

Malkin secured leases with People's Daily Online, Air China Ltd, and PCCW-HKT DataCom Services Ltd, a Hong-Kong based telecommunications company, for office space in the landmark building in New York.

Li & Fung Ltd, a Hong Kong-headquartered multinational group, rented the largest office the company had available at 48,000-square-meters, Malkin said.

A report by Deloitte China showed that the transaction volume from the M&A activities of Chinese companies' totaled $17 billion in the first half of this year, after hitting a record $62 billion last year, an increase of 157 percent over 2009.

"Starting this year, more Chinese companies have shown an increasing interest in renting offices in Europe and the US, instead of the more traditional locations in Africa and South America," said Julien Zhang, managing director of Jones Lang LaSalle Beijing.

"Meanwhile, inquiries about renting offices in South Africa and Brazil are also growing fast."

Malkin Holdings, which has its headquarters in the US, launched a "China business desk" in March to serve the rapidly growing demand from Chinese companies seeking offices overseas.

"Inquires come mainly from four types of business: finance, petroleum and natural gas, manufacturing and services," said Zhang. "Though the demand for office space from Chinese businesses is still a small proportion of the rentals in London or New York, the trend is obvious."

According to Malkin, the office leasing market in New York wasn't affected by the economic downturn in the US.

But he said that the rental revenue earned by his building hit a low point in 2008 and 2009, because of the global financial meltdown, before it rose to its current level at 10 percent below the peak price, although Malkin declined to disclose a precise figure.

"It's not booming, but it remains very solid and healthy," he said, adding that the economy of New York City is "a little bit outside of the US" - that is, the city's economy remains almost unaffected by the faltering economic recovery in the US.

Malkin said the world-famous skyscraper is cooperating with Chinese tour groups, which are seen as a major buisiness opportunity. Mandarin language services are available for Chinese tourists in the building, Malkin said.

Chen Keyu contributed to this story.

China Daily