Shanghai's office vacancy rate fell to 24.4% in the third quarter, the first quarter-on-quarter decline this year, as tenants took up 207,047 square meters of net space, up 23% from the previous quarter, according to CBRE's quarterly figures for the city published Oct. 19.

The turn matters for landlords, REIT investors and lenders across Asia with exposure to China's largest commercial property market. Shanghai has spent years absorbing a wave of new towers, and one in four square meters of its office space still sits empty. A quarter of falling vacancy does not end that glut, but on CBRE's measure it is the first improvement of 2026.

Robotics and AI lead Shanghai office demand

CBRE said industrial manufacturing was the biggest source of office demand in the quarter, led by robotics companies. Three new buildings with a combined 257,489 square meters were completed, the broker said, and the market still absorbed most of that space.

A second broker, Cushman & Wakefield, tracks a narrower pool of Grade A buildings and reported a stronger quarter. It counted net absorption of about 318,000 square meters, up 36.3% from the second quarter and 258.5% from a year earlier, with no new Grade A project completed in its survey. Its citywide Grade A vacancy rate fell to 20.9%, from 22.5% at the end of June, and had already dropped 1.1 percentage points in the second quarter, so the "first decline this year" applies to CBRE's data only. The two firms survey different sets of buildings, which explains why their supply, absorption and vacancy numbers differ. The rent and leasing-mix figures below come from Cushman & Wakefield.

Technology, media and telecommunications companies took 32.7% of transacted Grade A space, which Cushman & Wakefield described as a multiyear high, driven by AI, smart hardware and internet firms moving and expanding. Finance followed at 14.9%, professional services at 12.8%, retail and trade at 12.5%, and manufacturing at 8.6%. Domestic companies accounted for 80.9% of leased area.

Most of that activity was tenants changing address rather than adding headcount. Relocations made up 52.7% of transacted area, with occupiers moving into better buildings at lower rents, the broker said. New leases and expansions together accounted for 37.3%.

Rents keep sliding

Cheaper rents are what is pulling tenants in. Cushman & Wakefield said the citywide average transacted Grade A rent fell 1.5% from the prior quarter to 192.3 yuan per square meter a month, a 6.2% drop from a year earlier. That was a slightly smaller decline than in the second quarter, when rents fell 1.9%. In core districts the average was 224.1 yuan, down 1.7%, while non-core areas fell 1.3% to 154.9 yuan. The CBD vacancy rate stood at 18.2% and emerging submarkets at 23.9%.

CBRE's figures page did not give office rent levels.

The rest of Shanghai's commercial property market was mixed. Retail vacancy rose to 9.9% after three new malls added 170,000 square meters, CBRE said, with trendy fashion and toy stores leading leasing. Logistics vacancy eased 0.5 percentage point to 22.1%. Investors closed 29 property deals worth 13.56 billion yuan in the quarter, up 13.5% from a year earlier, and CBRE said year-to-date volume growth of 14% signaled a market that is bottoming out.

The office data land as China's wider economy holds up better than expected: the economy grew 4.5% in the third quarter, beating forecasts on factory output.

Beijing steadies, Shenzhen soft, more supply ahead

Shanghai is not alone in seeing tenants return. In Beijing, Cushman & Wakefield said 200,000 square meters of new supply arrived in the third quarter after six quarters without completions, and net absorption reached 164,178 square meters. Citywide vacancy was 15.3%. Beijing rents were close to flat in the quarter, down 0.1% to 191.16 yuan per square meter a month, though 11.3% lower than a year earlier.

Shenzhen remains the weakest of the three big markets. Its Grade A vacancy rate fell 0.8 percentage point to 28.3%, and the average rent softened to 142.2 yuan, the broker said. AI, semiconductor and consumer electronics firms produced more than 60% of the technology sector's leasing there.

The relief in Shanghai may be brief. Cushman & Wakefield said seven Grade A projects totaling 515,266 square meters are scheduled for completion in the fourth quarter. If they open on time, completions for 2026 would reach 938,938 square meters, keeping pressure on landlords. The broker expects well-located buildings in core districts to stabilize first as rent declines narrow.

That fourth-quarter delivery schedule is the number to watch. Those buildings will test whether the third-quarter drop in vacancy can hold.