Leasing demand continues to recover in Q1 2026

• Leasing activity sustained the momentum from 2025, achieving over 287,000 sqm of net absorption in Q1 2026. The current tenant- favourable market conditions continues to create upgrading opportunities for many local occupiers.
• In Q1 2026, 3PL providers continued to be the primary driver of leasing demand. Landlords responded by offering flexible lease terms to attract tenants, helping vacancy rate to drop 2.6 ppts to 25.1% over the quarter.

No new supply is recorded in Shanghai Logistic market in Q1 2026

• No new projects reached completion this quarter. Over the remainder of the year, four projects totaling circa 476,000 sqm are scheduled to reach completion, representing only 46% of the total new supply recorded in 2025.
• In 2026, new supply will be scattered across three Shanghai submarkets with Songjiang submarket accounting for the majority of new completions. New supply pipeline is expected to exert upward pressure on short-term vacancy rates in the area.

Rents continue to trend downward amid prolonged tenant-favorable market

• Overall rents decreased by 3.4% q-o-q on a like-for-like basis, settling at RMB 1.08 per sqm per day in Q1 2026. This represents a moderation in the rate of decline compared to Q4 2025 (-6.5% q-o-q).
• Shanghai’s logistics market recorded no investment transactions in the quarter, as investor caution persisted amid declining rental rates, rising supply, and greater demands for higher risk premiums.

Outlook: short-term pressure will persist amid the elevated vacancy level

• While supply-side pressure is expected to ease from 2026 onward, vacancy rate is projected to hover above 20% and will continue to exert downward rental pressure. That said, the rental decline is anticipated to moderate, with performance diverging across submarkets.
• We expect continued policy support for consumption in Shanghai to bolster near-term logistics demand, while falling rents may attract tenants from surrounding cities seeking greater delivery efficiency.