Tenants continued to optimize space amid the tenant-favourable market

• Leasing demand stayed stable in Q4 2025 as cost-conscious tenants continued to optimize space in a tenant-favourable market, driving net absorption of 263,500 sqm in the quarter and 533,600 sqm for 2025.
• 3PL providers remained the primary demand drivers in Q4 2025, consolidating space to enhance operational efficiency. Vacancy rate, as a result, decreased 2.0 percentage points to 27.8% by year-end 2025.

Over 1.0 million sqm of new supply completed in 2025

• Shanghai’s annual supply reached 1.02 million sqm after a Jiading project finished in Q4 2025, marking the second straight year exceeding 1.0 million sqm.
• In 2025, new supply was distributed across seven Shanghai submarkets we track, with Fengxian, Lingang, Jinshan, Qingpu, and Songjiang each delivering over 150,000 sqm, pushing up vacancy levels on respective submarkets.

Rents remained in the downward trajectory

• Overall rents decreased by 6.5% q-o-q on a like-for-like basis to RMB 1.12 per sqm per day. The ongoing downward trend was fueled by tenants’ heightened cost sensitivity and high vacancy levels, leading landlords to maintain competitive pricing strategies.
• Shanghai’s logistics market recorded no transactions in the quarter, as investors remained cautious due to falling rental rates, increasing supply, and the demand for higher risk premiums.

Outlook: Short-term pressure will persist amid the elevated vacancy level

• Although the supply wave is expected to ease from 2026 onward, the market is likely to remain tenant-favorable, with vacancy rates projected to stay above 20%. Rents are expected to continue declining due to competition, albeit at a slower pace.
• We expect continued policies to support consumption growth in Shanghai, which should support near-term logistics demand. At the same time, falling rents could encourage tenants from surrounding cities to relocate to Shanghai to improve delivery efficiency.