“Alongside policy support for traditional occupiers, a new source of demand is emerging from more client-facing uses of office space. While this remains relatively limited in scale, it is helping support leasing activity in selected buildings.” —— James Macdonald, RESEARCH



Competition drives product differentiation

•Foreign firms contribute over one-quarter of Shanghai’s GDP and around one-third of tax revenue. As a key destination for foreign investment and regional HQs, the city targets around 60 new MNC regional HQs in 2026.

•Two new projects were delivered in Q1/2026, adding 263,100 sqm of supply. Total Grade A office stock reached 20.6 million sqm, including self-use space.

•Net take-up reached 171,100 sqm, up 38.3% QoQ and equivalent to 65% of the 2025 full-year total, supporting expectations of a YoY recovery in 2026.

•Vacancy rates edged up 0.1 ppts QoQ to 23.8%. Zhenru, North Bund and Xuhui Riverside recorded notable declines on strong absorption.

•Grade A office rents fell 2.4% QoQ to RMB4.9 psm pday.

•Demand from financial and retail trade sectors remained stable, while non-profit occupiers showed rising upgrade demand, albeit from a low base.

•Occupiers are becoming more proactive, with increased lease restructuring and relocation assessments driven by cost control, ownership changes and macro conditions.