Leasing momentum continued amid tenant-favourable market conditions

• In Q2 2026, leasing activity remained robust, with net absorption exceeding 242,000 sqm. Local 3PLs and retailers continued to leverage tenant-favourable market conditions to upgrade their storage facilities.
• The overall vacancy rate decreased by 2.0 ppts to 23.2% in Q2 2026 as declining rents in remote submarkets attracted tenants with low delivery frequency requirements. Meanwhile, 3PLs expanded their footprint ahead of the mid-year shopping festivals.

One project reached completion in Q2 2026

• A new project in the Qingpu submarket was completed in Q2 2026, delivering 36,400 sqm of space. Three additional projects are set to complete in H2 2026, adding over 439,000 sqm of space and signalling a clear moderation from previous peaks.
• The Songjiang submarket faces further supply pressure as two new projects totalling over 306,000 sqm will enter the market in H2 2026. The influx of new supply further intensifies competition as the submarket’s stock has grown by circa 20% over the last two years.

Rents continued to decline amid a tenant-favourable market

• Overall rents decreased by 2.9% q-o-q on a like-for-like basis, settling at RMB 1.05 per sqm per day in Q2 2026, a slowdown compared to Q1 2026 (-3.4% q-o-q).
• Shanghai’s logistics market recorded no investment transactions in the quarter. Investors remained cautious and demanded higher risk premiums amid declining rental rates and rising supply.

Outlook: Short-term pressures will persist, with clear divergence emerging across submarkets

• While supply-side pressure is expected to ease from 2026 onward, the vacancy rate is projected to hover above 20%, exerting downward rental pressure. Nonetheless, rental declines are anticipated to moderate, while rental performance diverges across submarkets.
• Short-term demand will likely remain driven by tenant upgrades and relocations. Additionally, with rents in some Shanghai submarkets declining by more than 20% over the past year, tenants from surrounding areas may be drawn back to Shanghai.