China office market faces high vacancy rates across major cities

China is experiencing significant supply and demand imbalances in its commercial real estate market, with office vacancy rates in many major cities exceeding the 20% international warning threshold. According to data from CBRE, Shanghai recorded a 24.5% vacancy rate in the second quarter of 2026, the highest among 20 major global cities, while Beijing stood at 17.9%. The overall vacancy rate for office buildings in China reached 25.0%, accompanied by a 2.2% decline in average rental indices.

In first-tier cities, vacancy rates for Grade A offices have surpassed 21% on average. Shenzhen reported a vacancy rate of 29.3%, and Guangzhou reached 22.4%. Second-tier cities face even steeper challenges, with Chengdu and Nanjing both reporting vacancy rates around 38%.

Several factors contribute to this trend: a massive surge in supply from years of urban expansion, weakening leasing demand due to reduced foreign direct investment, and corporate cost-cutting measures. Many companies are opting to downsize, relocate to lower-cost areas, or consolidate offices. While the rise of AI and embodied intelligence companies has provided some localized demand in tech hubs like Beijing's Zhongguancun, experts suggest this niche growth is insufficient to offset the broader market decline.