Leasing activity remains structurally weak

• Demand remained subdued as companies viewed relocation as costly rather than strategic. Most occupiers renewed leases or downsized within current buildings to avoid fit-out and restoration expenses.
• Renewals dominated transaction volume as landlords prioritised occupancy over rent and increasingly offered lease restructuring, including extended free rent, tenant-funded fit-outs and flexible break clauses.

Vacancy dips slightly as net absorption remains modest amid supply digestion

• The overall vacancy rate dipped 0.2 percentage points to 11.6% by end-2025, a slight improvement amid weak demand. The decline was driven by selective leasing in core submarkets, with total net absorption at 21,790 sqm—marginally lower than Q3 2025.
• No new large-scale supply entered the market in Q4 2025. With approximately 700,000 sqm expected to complete in 2026, the current destocking phase remains critical for landlords to stabilise occupancy ahead of the next supply wave.

Rental adjustments deepen as pricing transparency increases across the market

• Tenant bargaining power is at a record high and landlords’ initial rental quotes have become more aligned with achievable levels. Average monthly rents in Beijing fell 5.6% q-o-q and 16.3% y-o-y, settling at RMB 210 per sqm.
• A few successful investment transactions were concluded in Q4 2025 in the non-Grade A segment, as owners adjusted pricing expectations significantly to meet buyer demand.

Outlook: Pressure mounts as supply peaks in 2026

• Citywide rental declines are expected to slow over the next 12 months, with average Grade A office rents forecast to fall by 6.6% in 2026. However, downward pressure will persist as new supply enters the market.
• While the pace of rent correction is expected to ease, the market will remain tenant-favoured, with occupancy preservation continuing to outweigh rental growth as the primary landlord objective.