Overall leasing activity slows with new leases dominated by relocation demand

• In Q3, landlords focused on securing lease renewals and retaining existing tenants, which reduced momentum. Compounded by relocations outside of Beijing, continued lease terminations and downward adjustment of lease terms, the market’s net absorption languished.
• Despite weakened demand, cost-driven relocation was relatively prevalent, propelled by storage-intensive sectors like third-party logistics and retail, which supported modest absorption in emerging submarkets such as Pinggu.

Timely easing in new supply alleviates vacancy pressure

• There were no additions to Beijing’s industrial market in the quarter, and the total stock remained constant at 4,246,600 sqm. Supply-side pressure eased, and the q-o-q vacancy rate plateaued, rising 0.5% this quarter to 30.1%.
• The delivery schedule for some new supply slowed, with some projects opting to postpone construction completion to alleviate absorption pressure, and others proactively upgrading specifications to facilitate a more competitive pre-leasing process.

Rent corrections in core markets narrow the price gap between key submarkets

• The Beijing logistics market recorded a 4.4% q-o-q decline in rents in Q3 2025. Rent corrections were most pronounced across core projects, as established submarkets like Shunyi and Daxing saw quarterly declines exceeding 5%.
• Ongoing geopolitical uncertainty restrained foreign investor investment appetite. No major en bloc deals closed in Q3 2025. The yield curve concaved upwards as investors demanded higher premiums.

Outlook: Rent adjustment lays the foundation for logistics market recovery

• The contraction in the historical rent price gap between different submarkets signalled intensifying competition. This ongoing rent adjustment could potentially unleash pent-up market demand.
• Looking forward, manufacturing tenants, such as those from the automotive sector, as well as pharmaceutical enterprises, are expected to become key drivers, providing crucial support for the core market’s bottoming-out and recovery.