Demand picked up as tenants actively seek upgrade and relocation opportunities

• Net absorption recorded 71,800 sqm in the CBD in 1Q26. Financial services firms is the primary demand driver while TMT tenants are also actively seeking upgrade opportunities. Moreover, Foreign companies in the financial and professional services are turning active.
• The decentralised market recorded 129,700 sqm in net absorption. The market continued to benefit from cost -saving and upgrading demand. Some 3rd party operators were proactive in cooperating with landlord whether in traditional mode or profit-sharing mode.

One new project of 221,000 sqm entered the market in Q1 2026

• Overall market vacancy rate edged down 0.2 ppts q-o-q to 24.1% as relocation and cost-saving drive leasing demand. CBD vacancy edged up 1.2 ppts q-o-q to 19.3% due to the new completion while decentralised vacancy dropped 1.3 ppts q-o-q to 28.4%.
• One project of 221,000 sqm reached completion in the CBD market. This premium project provided more opportunities for nearby upgrading tenants. The project has also secured one prominent internet company as anchor tenant.

Overall rents remained in downward cycle, while the pace of decline slowed

• In the CBD, rents decreased by 1.2% q-o-q to RMB 6.4 per sqm per day, reflecting widening project-level divergence. Some landlords are starting to become less accomodating in rental concession, especially for projects that has reached target occupancy rate.
• In the decentralised market, rents decreased by 1.5% q-o-q to RMB 4.1 per sqm per day. The trends of decentralisation and upgrading continued. Large available space remain on the market, exerting downward pressure on rental growth.

Outlook: Momentum is expected to pick up while rents continue to decline in the short-term

• Leasing momentum is expected to rebound, as inspections and inquiries increased. However, macro uncertainties may still defer tenants’ leasing decisions.
• Though rental decline slows down, overall market rents will remain under pressure in the short term considering large supply influx.