Tech expansion and cross-border services drive leasing momentum

• Leasing demand improved in Q1 2026, underpinned by expansion and upgrades from tech tenants such as consumer electronics. Accelerating overseas expansion also lifted office demand from cross-border service providers, such as marketing and logistics.
• Third-party workspace operators were active tenants in the quarter, leasing large office spaces across multiple Grade A office buildings in the Nanshan and Futian districts.

Citywide vacancy rates edge down

• Two new Grade A office projects were completed in Q1 2026, adding about 140,000 sqm in total, both located in Nanshan District.
• The citywide Grade A vacancy rate fell to 25.9%, down 0.5 ppts q-o-q, marking the second consecutive quarterly fall. Improved leasing momentum partially offset the impact of new completions.

The pace of rental decline slows

• Average Grade A rents declined by 2.3% q-o-q in Q1 2026. Although rents remained under downward pressure, the pace of decline moderated compared with the previous several quarters.
• In Qianhai, continued tenant inflows and improving amenities accelerated vacancy absorption, supporting landlord sentiment and keeping rental declines at a low level in Q1 2026, broadly in line with the previous quarter.

Outlook: Office market to see structural demand improvement

• Around 1.7 million sqm of new supply is projected to enter the market over the next 12 months, marking a near-term peak. Some landlords plan to convert vacant spaces into hotels and healthcare facilities, which should help partly ease vacancy pressure.
• Incremental office demand in Shenzhen is expected to be driven by the expansion of emerging industries, corporate overseas growth and related service providers, as well as the further take-up of headquarters for self-use.