The expansion and leasing demand from AI and hard-tech industries continues to materialize, supporting a significant recovery in the net absorption of Beijing's Grade A office market in the second quarter. According to a Q2 2026 Beijing office market report, the three core indicators of net absorption, vacancy rate, and rents for Beijing's Grade A office market improved simultaneously in the single quarter. Submarkets like Zhongguancun and the CBD technology sector showed strength, indicating a market divergence.
However, it is noteworthy that Beijing's Grade A office market will face renewed pressure from rising vacancy rates in the second half of this year. Data indicates the market will enter a high-supply cycle lasting approximately 18 months from the second half of this year through 2027, with new supply nearing 1.5 million square meters. Analysis suggests that a fundamental systemic constraint on the market's recovery remains insufficient effective macroeconomic demand. In the short term, the overall volume of new demand still appears weak compared to the substantial upcoming supply. Long-term confidence in the market remains, with the expectation that the market will eventually return to a supply-demand equilibrium.
Technology-Driven Demand Materializes
Entering Q2 2026, the macroeconomy shows distinct structural divergence, with "new sectors strong, old sectors weak" and "external strength, internal weakness" coexisting. New productive forces like AI continue to release growth momentum, driving rapid expansion in information transmission, software, and leasing/business services. This has driven office demand from technology-related productive service industries to spread from local hotspots to broader areas, accelerating its materialization.
Beijing's Grade A office market continued its absorption trend. Data shows that in Q2 2026, the overall net absorption for Beijing's Grade A office market reached 146,000 square meters, hitting a three-year quarterly high. The cumulative net absorption for the first half of the year was approximately 203,000 square meters, continuing the trend of absorbing 200,000 square meters per half-year.
Sustained absorption has also improved the vacancy rate indicator. Data indicates that, combined with no new supply in core submarket areas, increased demand pushed the overall vacancy rate for Beijing's Grade A office market down to 17.5% by the end of Q2, a decrease of 1.6 percentage points from the end of last year.
Simultaneously, the decline in the overall market's average rent continued to narrow. Data shows the average net effective rent for Beijing's Grade A office market fell to RMB 208.2 per square meter per month in Q2, a quarter-on-quarter decline of 2.1%, the smallest quarterly decline in nearly three years. According to related intermediary information, the listed price for Grade A office space in Zhongguancun's Dinghao Building was around RMB 14 per square meter per day at the end of Q3 2025. Current listing data shows a 1,093.07 square meter space in Dinghao Building listed at RMB 15 per square meter per day, while another 650 square meter space is listed at RMB 13 per square meter per day, indicating the overall gap from Q3 2025 listing prices is not substantial.
Submarket Divergence Emerges
However, beneath the impressive aggregate market data, submarket performance is severely divergent. Data shows that benefiting from strong expansion by tech innovation firms, the Zhongguancun Grade A office market recorded approximately 40,000 square meters of absorption this quarter. The vacancy rate for Zhongguancun's Grade A office market also saw a notable decline. Among 26 monitored Grade A buildings in Zhongguancun, only 10 have vacancy rates above 10%, including two relatively new projects launched in the past two years. By the end of Q2, Zhongguancun's vacancy rate further decreased by 1.1 percentage points quarter-on-quarter to 16.3%, a cumulative drop of about 6 percentage points from the high of over 22% at the end of 2024.
Average rents in Zhongguancun show clear signs of bottoming out. Data indicates that in Q2, only 5 out of the 26 Grade A buildings saw quarter-on-quarter rent declines, with the market's average rent decline narrowing to 0.9%. In Beijing, the CBD area also benefits from the tech innovation dividend. Data shows that thanks to the relocation of major hard-tech company headquarters to the CBD core area, after three consecutive years of negative net absorption, the CBD Grade A office market achieved nearly 44,000 square meters of absorption in Q2.
Vacancy Rate Faces Upward Pressure
Looking ahead to the second half of the year, demand will remain the core driver for absorption in Beijing's Grade A office market. Analysis suggests that the K-shaped recovery trajectory the macroeconomy is undergoing will continue to profoundly impact the structural changes in office market demand. More submarkets with high industry prosperity are expected to further benefit from rapidly released new demand, and structural trends on the demand side will persist through the second half.
Concurrently, it is important to note that the concentrated influx of new supply will create significant vacancy pressure. Data shows that the window for vacancy rate decline in Beijing's Grade A office market, which began in 2025 and lasted through this quarter, has essentially closed. The market will enter an approximately 18-month high-supply cycle from the second half of this year through 2027, with new supply nearing 1.5 million square meters. In the second half of this year alone, the core market will see over 700,000 square meters of new supply, with about 600,000 square meters concentrated in the eastern market. The vacancy rate is expected to surpass previous highs again.
At that time, absorption pressure will significantly increase in submarkets with concentrated new supply, competition for premium tenants will inevitably intensify, and the geographical supply-demand mismatch in Beijing's office market will further worsen. Analysis reiterates that insufficient effective macroeconomic demand remains a deep-seated systemic constraint hindering market recovery, and the overall market's structural trend remains unchanged. Although tech innovation firms are releasing more new office demand as expected, the overall volume of new demand is still weak compared to the massive impending supply, insufficient to drive a rapid vacancy rate decline across the entire market in the short term.
The current market is still dominated by structural trends and regional divergence, and the market's return to a rebalanced supply-demand trajectory will require more time. In the long term, confidence in the market remains high. It is believed that the dual-cycle resonance of the current "tech innovation cycle" and the "office market rebalancing cycle" will drive Beijing's office market into a "new supply-side reform" centered on quality transformation and efficiency improvement. The market is steadily returning to a virtuous cycle of "industrial upgrading—supply-demand rebalancing—asset value reshaping," ushering in a new stage of sustainable, high-quality growth.