A continuing influx of new space is leaving large occupancy gaps in China’s office sector, with the vacancy rate for high-quality properties across major cities exceeding that of the U.S. office market average, according to data from Cushman & Wakefield.
The average vacancy rate for Grade A offices in the 20 major cities of Greater China (including Hong Kong and Taiwan) stood at 24.9% at the end of Q2, rising 1.7 percentage points year-over-year, the global brokerage noted in a recently published report.
That figure surpasses the overall U.S. office vacancy rate of 20.8% recorded by Cushman & Wakefield in Q2. “Overall Grade A office space demand has not yet recovered, with rental levels and vacancy rates remaining under pressure in 2024 and through H1 2025,” the brokerage said in its Chinese market update.
On a more hopeful note, the company added: “However, we anticipate that accumulating positive economic factors, including the state of the general economy, government policy, and individual city initiatives, may provide a lift to office demand ahead.”
Drilling down into the data, Taipei had the lowest vacancy rate, at 2.7%, of the six “major cities” in Greater China – a category that also includes Hong Kong and the tier-1 mainland cities. Among the tier-2 cities, Qingdao in northeast China had the lowest vacancy at 24.7%.
The rapid growth of office supply in many markets is increasing competitive pressure on landlords and elevating the importance of optimizing space and differentiating projects based on user needs. Total new supply of premium core city office space expanded by 8.3% year-over-year to 1.7 million square meters (18.2 million square feet) in the first half of 2025.
Although Beijing saw notably weak supply growth from the first quarter of 2024 through the first half of 2025, the other tier-1 cities of mainland China all experienced major influxes of new high-quality office space, ranging from 441,713 square meters (Guangzhou) to 1.34 million square meters (Shanghai)
The market will face a new supply peak in the next two to three years, with some 11.4 million square meters of inventory in the pipeline through the end of 2025, which is expected to boost the vacancy rate further and intensify downward pressure on rents.
Limited new leasing demand has already caused many new projects to be postponed as Grade A office rents in tier-1 cities fell 37% from H1 2018 to H1 2025. “Lower leasing rental levels to secure greater leasing volume remains the key market trend,” the report notes.
Grade A office inventory across 20 cities totaled 7.21 million square meters as of Q2, Cushman & Wakefield reported. Net absorption of premium core city office space totaled 760,000 square meters across the Greater China market in H1, up 5.5% year-over year.