Leasing demand keeps recovering, lifted by expansion in tech‑driven sectors

• The office market extended its steady recovery in Q2 2026, with net absorption showing strong performance and achieving significant growth both q-o-q and y-o-y.
• Rapid growth in emerging sectors, notably smart hardware, AI and domestic brands expanding overseas drove flight-to-quality relocations and space expansion. Also, third-party office operators boosted net absorption, sustaining robust leasing momentum.

Citywide vacancy rate continues its downward trajectory

• Two new projects entered the market in Q2 2026, bringing a total GFA of around 100,000 sqm, located in the Qianhai and Liuxiandong submarkets.
• Despite the steady influx of new supply, recovering demand drove the citywide vacancy rate down to 24.9% at quarter-end, dropping by 1.0 ppt q-o-q to mark a third consecutive quarter of decline.

Rental declines narrow as effective absorption boosts market sentiment

• Effective space absorption of has boosted landlords’ market expectations and shifted pricing strategies, resulting in a notably weakened willingness among landlords to offer substantial rent concessions.
• The q-o-q rental decline narrowed to 1.0% in Q2 2026, marking the second consecutive quarter of improvement, with Futian CBD seeing one of the most pronounced recoveries.

Outlook: Continued demand recovery is expected to mitigate rental pressures

• Demand will maintain its structural recovery, mainly driven by expanding high-growth firms, supply-chain clustering around industry leaders, and active leasing from non-traditional sectors such as hotels.
• While over 1.5 million sqm of upcoming supply in the next 12 months may cause a temporary rise in vacancy, improving demand expectations will make landlords more resistant to rent cuts, further easing downward rental pressure.