Core Insights - The report by JLL indicates that the rental decline in Shanghai's office market will continue into Q3 2025, driven by cost-driven relocations and upgrades, while some industry demands are showing signs of recovery [1] Office Market - In Q3 2025, the net absorption of Grade A office space in Shanghai reached 190,400 square meters, with cost-driven relocations and upgrades being the primary demand sources [1] - The rental rates for Grade A office space continued to decline, with Central Business District (CBD) rents at 6.6 CNY/sqm/day and non-CBD rents at 4.3 CNY/sqm/day [1] - The narrowing rental gap between Grade A and Grade B offices is prompting more companies to relocate to Grade A buildings for better cost-effectiveness [1] - Landlords are maintaining flexible negotiation terms to retain existing tenants and attract new ones, with some willing to restructure leases under extended terms [1] Vacancy Rates - The vacancy rate in Shanghai's CBD decreased by 0.6 percentage points to 16.3% due to cost-driven demand and no new supply in the quarter [2] - The vacancy rate in non-CBD areas also fell by 0.5 percentage points to 30.5%, driven by upgrade demands from industrial park and suburban tenants [2] Industrial Parks - The net absorption in Shanghai's industrial parks was 41,200 square meters in Q3, with technology and internet companies being the main demand drivers [3] - The overall vacancy rate in Shanghai's industrial parks increased by 0.9 percentage points to 26.1% due to new project completions and cautious leasing demand [3] - The rental rates in industrial parks decreased by 4.4% to 3.5 CNY/sqm/day, reflecting ongoing market pressures [3] Logistics Market - The overall rental rate in Shanghai's logistics market fell by 5.8% to 1.20 CNY/sqm/day, driven by cost-saving demands from tenants [3] Investment Market - In Q3 2025, Shanghai's investment market showed signs of recovery with 17 asset transactions totaling 14.97 billion CNY, a 78.1% increase quarter-on-quarter [4] - The average transaction amount per project was 881 million CNY, significantly higher than previous averages [4] - Office assets dominated the market, accounting for 75% of transaction value and 53% of transaction volume [4] - Investment demand constituted 91% of the market, indicating a strong capital allocation drive [4] - Core area projects contributed 86% of transaction value and 81% of transaction volume, reflecting a return to core area interest [5] - Future expectations for the commercial real estate investment market in Shanghai remain positive, driven by macroeconomic policies and foreign investment interest [5]