The overall market continued to benefit from upgrading demand

• Net absorption recorded 106,200 sqm in the CBD in Q2 2026. Financial and professional services remained the dominant drivers in the market. Several high-quality projects attracted active leasing activities.
• The decentralised market recorded 125,900 sqm in net absorption. The TMT sector, particularly gaming and AI-related companies, maintained their leasing momentum.

Two new projects with a total GFA of 135,400 sqm entered the market in Q2 2026

• Overall market vacancy rate edged down 0.7 ppts q-o-q to 23.5% as leasing activities picked up. Despite supply influx putting pressure on the CBD market, the CBD vacancy rate remained largely flat at 19.3% amid active upgrading relocations.
• No new completions entered the decentralised market in the quarter. Cost-saving demand from CBD submarkets along with upgrading demand from Grade B projects drove down vacancy rate by 1.2 ppts q-o-q to 27.1%.

Rental decline slowed down while project-level rental divergence continued to widen

• In the CBD, rents decreased by 1.2% q-o-q to RMB 6.3 per sqm per day. Landlords of several premium projects tightened their negotiating stance and dialled back on lease-term flexibility as occupancy reached a relatively higher level.
• In the decentralised market, the large number of available spaces continued to put pressure on rental growth. Rents decreased by 1.0% q-o-q to RMB 4.1 per sqm per day. Several submarkets with active leasing momentum showed deceleration in rental decline.

Outlook: Momentum is expected to improve further, however, rents will continue to diverge

• Leasing momentum is expected to rebound as traditional sectors remained resilient while AI-related emerging sectors continued to show sustained expansionary demand.
• Given the supply influx, overall rents are projected to remain under pressure in the short term. Premium projects that maintained consistent occupancy rate will lead the market in rental stabilisation and recovery.