Shanghai’s Grade A office market has experienced a widening demand-supply gap since 2019. Annual new supply has averaged over 1 million sqm, significantly outpacing net absorption of 660,000 sqm. This oversupply caused rent declines, with more than 80% of submarkets experiencing quarterly drops exceeding 0.75% in 2024. JLL Research analysed nearly 1,000 relocation leases since 2019 and approximately 1,200 new leases between 2022 and 2024. This analysis aimed to gain deeper insight into these dynamics and their impact on Shanghai’s submarket landscape.
On the demand side, falling rents and abundant supply have expanded tenants’ options, enabling more cost-driven upgrades. Notably, 74% of relocation leases (2022–2024) aligned with this trend. Six core industries—financial services, professional services, TMT (technology, media, and telecom), manufacturing and trading, retail, and life sciences— continue to anchor demand, collectively accounting for over 85% of leasing activity. Meanwhile, emerging "new engines", driven by technological innovations and changing consumer behaviours, are gaining momentum. These new sectors accounted for 30% of 2024 demand, converging with traditional industries to unlock new opportunities.
Figure1: Diffusion of new engines in Shanghai office market (2024)
*Based on leasing areas
Source: JLL Research
Moreover, our analysis assessed submarket vitality by combining two critical dimensions: industry clustering and diversity. Submarkets shaded in darker red indicate strong industry clusters, while those in darker blue signify greater industry diversity; purple highlights submarkets excelling in both. Standout submarkets such as West Nanjing Road, Xintiandi, Qiantan, and Xuhui Bund demonstrate strong resilience and growth potential, characterised by vibrant industry clusters and dynamic business ecosystems. This dual advantage enhances their ability to attract more firms and supports the expansion of their industry networks.
Figure 3: Industry agglomeration and diversity by submarket (2022-2024)
