In recent news from Epoch Times on October 26, 2025, it has been reported that the Chinese economy continues to decline. A report from a third-party authoritative institution shows that in the third quarter of 2025, the prime office market in Shanghai, which serves as a barometer for the Chinese economy, is facing an unprecedented structural crisis. Several industry experts have pointed out that offices and retail spaces are the most accurate reflection of China’s economic situation, acting as a “barometer” for its economic health. With the current vacancy rates and slow turnover, the market may take decades to absorb the existing inventory, indicating mounting economic pressures.
International renowned commercial real estate service companies such as Cushman & Wakefield and Colliers International have released market data for the third quarter of 2025, showcasing a bleak outlook and extreme pessimism regarding the economic prospects, which has sparked concerns and interpretations within the industry.
Financial blogger “Weihu Shuofang” pointed out that compared to residential properties, office and retail spaces are more indicative of economic conditions. Data from third-party platforms like Cushman & Wakefield offer more valuable insights than official statistics. The report reveals that in Shanghai, the stock of prime offices in the third quarter reached 17.81 million square meters, with a net absorption of only 29,000 square meters, indicating that a vast amount of vacant inventory remains unutilized by the market.
Analyzing the situation, he stated, “This means that on average, each prime office building rents less than 10,000 square meters per month.” Considering that office spaces are symbolic of a company’s image, the reluctance of even Shanghai business owners to rent reflects a collapse in overall economic confidence.
Reflecting on the situation a decade ago, he recalled how in Beijing and Shanghai’s CBD areas, office spaces were in high demand, with companies queuing up for leases and even needing to offer incentives to intermediaries to jump the queue. Today, Shanghai’s prime office stock stands at 17.81 million square meters, with a turnover area plummeting by over 80% compared to the same period last year.
At the current turnover rate, it would take Shanghai over 100 years to fully absorb the existing inventory, far exceeding the industry’s recognized 6-year healthy cycle. Describing the current Shanghai commercial real estate market, he likened it to a patient in the ICU waiting to be unplugged.
Financial influencer “Master Mei” also expressed concerns, citing a report from Colliers International on the market prospects for Shanghai’s prime office space in the third quarter of 2025. The report highlights an 80% drop in turnover compared to the previous year, marking the lowest level in nearly five years. The net absorption for the entire year up to 2025 is 258,000 square meters, while Shanghai’s prime office stock in the third quarter reached 17.81 million square meters.
Discussing the grim scenario, he noted that in Shanghai alone, 114,000 square meters of prime office space were newly added in 2025. This influx of new office buildings directly exacerbates vacancies, leading to a significant surplus of vacant prime office spaces. He emphasized that this trend is not limited to Shanghai but is observed in increasing office spaces nationally.
The report reveals that the vacancy rate for Shanghai’s prime office space in the third quarter of 2025 has reached 21.4%, a 0.3% increase from the second quarter. The net effective rental price averages at 6 RMB per square meter per day, reflecting a 3.3% quarterly decline, while the national average rent stands at only 4.5 RMB.
Master Mei shared a personal anecdote about a friend who recently vacated an office space at the intersection of Hongqiao Road and Kaixuan Road in Shanghai due to exorbitant property fees. Surprisingly, the property company proactively reduced prices in hopes of retaining tenants, showcasing the intense market competition.
He further highlighted that the situation in the national office space market is even worse than residential properties. According to a report from the China Index Research Institute on the office rental index for the third quarter of 2025 in China, the average rent in 80 major business districts across the country, including Shanghai’s Huaihai Road, is 4.55 RMB per square meter per day, a 0.33% decrease quarter-on-quarter and a cumulative decline of 1.39% over the previous three quarters. of the year. In 64 districts, the rental rates have decreased, accounting for 80% of the total.
Master Mei lamented that commercial real estate, particularly the office sector, has deteriorated significantly, raising concerns about the future of shopping malls within commercial properties that heavily rely on extended holiday seasons like May Day and National Day holidays.
Weihu Shuofang noted that based on the vacancy rates, rental price drops, and turnover speed of office and retail spaces in first-tier cities, the real economic downturn in China has begun. The deterioration in commercial properties is even more pronounced in provincial capitals and third- and fourth-tier cities compared to first-tier cities. If first-tier cities represent cancer in the real estate market, then commercial property markets in second and third-tier cities are on the brink of collapsing.
He pointed out that the real estate data of the four major cities, Beijing, Shanghai, Guangzhou, and Shenzhen, have hit historic lows. As a barometer of economic health, China’s future real estate market is veering off track, indicating a troubling trend in the broader economy.