Tech firms continue to drive leasing activity

• Leasing market was highlighted by multiple whole-floor or larger transactions primarily driven by consumer electronics companies and tech-related service companies supporting Chinese enterprises’ overseas expansion.
• Faced with falling rents in Grade A buildings, some tech firms with solid business fundamentals upgrade to Grade A spaces to support more efficient R&D and operations.

Citywide vacancy rates edge down

• Two new projects entered the market in Q4 2025, adding approximately 134,000 sqm in total. Both were 100% self-used headquarters buildings, with some business units already moving in and commencing operations.
• Citywide vacancy rates declined by 1.5 ppts q-o-q. The Qianhai precinct recorded the most notable improvement, as projects completed in the past 2–3 years attracted more tenants with competitive rents and maturing amenities.

Landlords continue to cut rents to drive absorption

• Amid insufficient effective demand, landlords maintained deep discounts and extended rent-free periods to accelerate vacancy absorption ahead of year-end, leading to a continued decline in Shenzhen’s average rents.
• Renewal negotiations increasingly favoured tenants, with renewal rents now broadly converging with new-lease market levels. Furthermore, large and high-quality tenants initiated more frequent rent review within lease term, further pressuring rents downward.

Outlook: A near-term supply peak is expected

• More than 1.5 million sqm of new supply is expected in 2026, marking a near-term peak. As new headquarters complete, relocations by tech and financial firms into their HQs and the resulting move-outs from existing leased space will intensify vacancy pressure.
• As demand for consumer electronics recovers and the adoption of large AI models accelerates, the demand for R&D space is expected to rise. This should support continued office expansion and upgrades among consumer electronics firms.