How corporate headquarters reshape Shenzhen’s office market

Since establishing itself as China’s first special economic zone in 1980, Shenzhen has transformed from a remote agricultural county into a dynamic and innovative metropolis. As the birthplace of numerous globally renowned high-tech firms, including Tencent, DJI, Huawei and BYD, Shenzhen’s office market has flourished. In 2024, the total stock of Grade A offices in Shenzhen reached 13.84 million sqm, placing the city as the second largest office market in mainland China.

Shenzhen’s development path and economic structure have significantly influenced and shaped its office market. Its office landscape is defined by a few unique trends.

Trend 1. Shenzhen’s Grade A office market reflects an east-through-west landscape, mirroring the city’s urban development journey.

Trend 2. Company headquarters and urban renewal projects serve as primary sources of new office supply. The local government actively allocates commercial land to high-tech and financial services companies to foster the growth of the local headquarters economy. Simultaneously, many urban renewal projects in mature precincts are sold in bulk to medium-sized companies for self-use.

Trend 3. The integration of the Guangdong–Hong Kong–Macao Greater Bay Area creates opportunities for Shenzhen’s commercial real estate market.

We have categorised Shenzhen’s Grade A office projects into four groups by ownership type, with a focus on headquarters (HQ) office properties. The continuous development of Shenzhen’s headquarters economy has driven the HQ proportion from 9% in 2009 to 32% by 2024.

Figure 1: Composition of Shenzhen Grade A office stock (2024)

Source: JLL South China Research

Headquarters fulfil enterprises’ diverse needs and support the overall office demand.

Initially, demand for headquarters in Shenzhen stemmed from the operational needs of large state-owned enterprises (SOEs). Subsequently, driven by technological innovations and business growth, leading enterprises across various sectors have also expressed their needs for headquarters.

Figure 2: Three stages of office needs during business expansion

Source: JLL South China Research

Headquarters in Shenzhen exhibit diverse operational modes, with variations in self-use portions, landlord’s core businesses, and real estate strategies. For instance, as of 2024, financial institutes and Technology, Media, and Telecom (TMT) firms own 50% and 25% of the total headquarters stock, respectively.

Despite recent escalating oversupply, the high headquarters proportion contributed approximately 40% to Shenzhen’s 847,000 sqm annual net absorption over the past five years, the highest among China’s four Tier-1 cities.

Headquarters require enhanced asset management.

Supported by self-use and leasing demand from upstream and downstream companies, headquarter properties have slightly outperformed other categories in occupancy rates. However, the recent increase in headquarter vacancy rates is particularly concerning, due to the surge in headquarter supply with a declining self-use ratio. Consequently, the headquarter rent decline has been the most pronounced among all.

In response to the ongoing supply-side pressures and demand-side changes, Shenzhen’s landlords are actively adjusting their leasing strategies. This approach aims to provide accessible, high-quality workplace solutions that contribute to industrial development. As market competition intensifies, HQ landlords must reassess the value of their headquarters assets from a more market-oriented perspective. This involves the need for professional property and asset management that attracts tenants and preserves property value by overseeing the entire lifecycle of commercial office properties.

Figure 3: The full lifecycle of asset management

Source: JLL South China Research