Core Insights - The report from Knight Frank indicates that the Beijing Grade A office market showed signs of recovery in Q2 2025, with a net absorption of 12,960 square meters, reversing the negative absorption trend from the previous quarter [1][2] - The average vacancy rate in Beijing's Grade A office market decreased slightly to 18.4%, a 0.2 percentage point drop from the previous quarter, stabilizing at the same level as Q4 2024 [2][5] - Average rental prices for Grade A offices fell by 1.6% to RMB 233.1 per square meter per month, with the decline rate narrowing compared to previous quarters [1][5] Market Supply and Demand - There was limited new supply in the first half of the year, with only one new project completed, and no new projects expected to be delivered in the second half of 2025 [2][7] - The high-tech sector dominated leasing transactions, accounting for 34% of the total leased area, with significant contributions from companies like ByteDance [5][6] - Financial and professional services sectors followed, contributing 22% and 16% respectively to the leasing area [5] Rental Trends - The highest rental rates were recorded in the Financial Street area, which saw a 6.1% decrease to RMB 389.2 per square meter per month [6] - The Central Business District (CBD) experienced a rental decline of 2.8% to RMB 255.4 per square meter per month, with a vacancy rate of 15.1% [6] - The Wanjing-Jiuxianqiao area saw a rental rate of RMB 161.2 per square meter per month, reflecting a 0.9% decrease [6] Future Outlook - Knight Frank anticipates a peak in supply in 2026, with an expected 757,000 square meters of new office space, including significant projects in the CBD [7] - The report suggests that market conditions will increasingly favor tenants, with a focus on flexible lease terms and enhanced service offerings from landlords [7]