Solid new project leasing activities boost overall net absorption

• In Q2 2026, Shanghai’s urban area recorded 204,500 sqm in net absorption, driven by solid leasing activity in new projects. Project performance in core areas showed greater resilience than decentralised areas due to tighter supply and more stable demand.
• Leasing demand from sportswear and collectible toy brands remained solid in Q2 2026, supported by consumers’ growing focus on wellness and emotional fulfillment. Affordable dining and consumer electronics brands also remained active in expanding their footprints.

Three new projects launched in Q2 2026

• In Q2 2026, one project with a GFA of 32,000 sqm reached completion in the prime area. Despite the new completion, prime area vacancy rate remained flat at 8.1%, bolstered by stable leasing activities in both existing and new projects.
• The decentralised area saw two new projects with a combined GFA of 237,500 sqm launched in Q2 2026, slightly pushing up the average vacancy rate up by 0.2 ppts q-o-q to 13.7%.

Rents remain under pressure in Q2 2026

• Rents remained in downward cycle in the quarter as landlords continued to prioritise occupancy by providing rental concessions. Prime ground-floor rents fell 0.8% q-o-q to RMB 41.4 per sqm per day, while decentralised rents fell 1.2% q-o-q to RMB 14.1 per sqm per day.
• Sasseur, a leading Chinese outlet operator, acquired an unfinished mall asset in Minhang District through auction. The asset, representing 150,000 sqm of retail GFA, was purchased for RMB 580 million and is expected to be repositioned into an outlet mall.

Outlook: Key sectors to sustain resilient growth

• We expect retail leasing momentum to remain steady across key sectors such as sportswear, collectible toys, consumer electronics, and affordable dining, driven by growing consumer preferences for wellness, emotional fulfillment, and value for money.
• In the remainder of 2026, Shanghai’s retail market is set to receive over 434,400 sqm of new supply, which will keep rents under pressure. Well-operated projects in core areas are expected to continue outperform going forward.