F&B brands lead the retail leasing market

• Supported by steady local spending and surging tourism, Guangzhou’s F&B sales grew by 5.1% y-o-y in the first five months of 2026. Thus, F&B dominated retail leasing, accounting for half of the total volume by area.
• Additionally, fuelled by the rise of experiential consumption, service-oriented sectors such as personal care and entertainment expanded resiliently, while other retail sectors remained relatively subdued in Q2 2026.

Urban vacancy edges up; suburban remains stable

• In the urban area, proactive large-scale tenant adjustments at a landmark mall, combined with the slow absorption of vacant units in some other projects, edged the urban vacancy rate up to 7.5%.
• Most suburban projects maintained stable occupancy levels by securing large-scale leasing in the F&B and entertainment sectors, maintaining a stable vacancy rate of 4.6%.

Persistent leasing pressure results in widening rental declines

• Amid constrained leasing demand, leading shopping malls were increasingly offering rental concessions to secure trendy brands and maintain long-term competitiveness.
• Meanwhile, softening sales volumes deterred traditional retailers from expansion within non-core projects, forcing these landlords to target lower-budget non-chained brands and entertainment operators to stabilize occupancy.

Outlook: Tourism as a consumption catalyst keeps driving leasing momentum

• In 2026, over 53 major concerts and a growing sports calendar will drive a steady influx of visitors to Guangzhou. This robust tourism momentum, coupled with resilient local consumption, is expected to bolster leasing demand from F&B and outdoor sports sectors.
• Over the next 12 months, Guangzhou is expected to welcome approximately 740,000 sqm of new supply. This influx may sustain competitive pressures, delaying the stabilization of supply-demand dynamics in the near term.