Group 1 - The high-tech industry is the main driver of leasing transactions in the first half of the year, accounting for 34% of the total transaction area [6] - In the second quarter, the average vacancy rate in Beijing's Grade A office market was 18.4%, a slight decrease of 0.2 percentage points from the previous quarter, with a net absorption of 12,960 square meters [1][6] - The average rent for Grade A offices in Beijing decreased by 1.6% to RMB 233.1 per square meter per month, with a year-on-year decline of 7.4% compared to Q4 2024 [1][6] Group 2 - The supply peak year is expected to be 2026, with an anticipated 757,000 square meters of office space, including 409,000 square meters in the central business district [9] - Domestic enterprises are maintaining a cautious attitude towards long-term investments due to global economic uncertainties, while consumption-boosting policies have positively impacted production and market demand [9] - The market is expected to tilt further towards tenants, with landlords adopting flexible lease terms and enhanced service quality to attract tenants [9]

Core Insights - The report by Knight Frank indicates a recovery in Beijing's Grade A office market in Q2 2025, with net absorption turning positive at 12,960 square meters [1][2] - Average rental rates have decreased by 1.6% to RMB 233.1 per square meter per month, with a narrowing decline compared to previous quarters [2][3] Market Demand and Supply - Limited new supply in the first half of 2025, with only one new project completed; no new projects are expected in the second half of 2025 [2] - Vacancy rate in Beijing's Grade A office market decreased by 0.2 percentage points to 18.4%, stabilizing compared to Q4 2024 [2] Sector Performance - The technology sector led leasing transactions, accounting for 34% of total transaction area, followed by finance and professional services at 22% and 16% respectively [2] - High-quality state-owned enterprises are becoming more cautious in their office expansion plans, impacting the core area office market [2] Rental Trends - Financial Street's rental rates fell below RMB 400, decreasing by 6.1% to RMB 389.2 per square meter per month, with a year-on-year decline of 8.7% [3] - Central Business District rents decreased by 2.8% to RMB 255.4 per square meter, down 12.5% year-on-year; vacancy rate decreased by 0.7 percentage points to 15.1% [3] - Zhongguancun area saw a rental rate of RMB 258.2 per square meter, with a 1.0% decrease and a significant vacancy rate drop of 3.2 percentage points to 12.8% [3] Future Outlook - Knight Frank anticipates a peak supply year in 2026, with 757,000 square meters of office space expected [4] - The domestic consumption-boosting policies have positively impacted market demand, leading tenants to prioritize flexible lease terms [4]