China’s office market is facing a significant downturn, with record-high vacancy rates prompting developers to offer incentives to attract tenants. Major cities like Beijing, Shanghai, Shenzhen, and Guangzhou are seeing vacancy rates climb, with Shenzhen hitting a staggering 30.6% in June 2025. To combat this, developers are slashing rents, offering subsidies, and introducing additional services to retain and lure tenants.
Since 2020, rents for grade-A office spaces in China’s largest cities have fallen by 20% to 40%, with Beijing experiencing the sharpest decline. The sluggish demand is mainly due to corporate cost-cutting and a reduced presence of multinational companies. In response, developers like China Merchants Commercial REIT and Hang Lung Properties are offering flexible lease terms, EV charging subsidies, and other tenant-friendly services to make office spaces more attractive.
Local governments are also stepping in, offering rental subsidies and encouraging the repurposing of office buildings for residential use to alleviate some of the pressures on the commercial market. However, experts suggest that a broader economic recovery is essential to address the deeper structural issues within the office sector.
While the market faces challenges, these adaptive strategies could help facilitate a gradual recovery as developers continue to cater to changing tenant demands.
