Zhongzhi Research Institute: Commercial shop rents in key cities will continue to decline in 2025

CITIC Securities Finance APP has learned that on February 23, the China Index Academy released the 2025 China Commercial Real Estate Rental Index Research Report. In 2025, the consumer market maintains steady growth, but the growth rate slows in the second half of the year. The policy of replacing old products with new ones for consumer goods drives rapid growth in retail sales of home appliances/3C, furniture, and other categories, but overall growth in catering consumption slows down. Most retail commercial projects continue to choose price reductions to increase volume and reduce vacancies, with rental declines in key cities’ shops widening. In the second half of 2025, the average rent for shops on Bai Street is 24.05 yuan per square meter per day, a month-on-month decrease of 0.47%, with the decline expanding by 0.12 percentage points compared to the first half of 2025. The full-year decline is 0.81%, larger by 0.39 percentage points than the total decline in 2024.

Analysis of Shop Rental Index Trends

Since 2025, policies to boost consumption have taken effect, maintaining steady growth in the consumer market. In 2025, China’s total retail sales of consumer goods reached 50.1 trillion yuan, a year-on-year increase of 3.7%, accelerating by 0.2 percentage points compared to 2024, but since June, the monthly growth rate has declined for seven consecutive months. The effect of the policy of replacing old products with new ones is evident, with retail sales of goods increasing by 3.8% year-on-year in 2025, faster by 0.6 percentage points than the full year of 2024; policies to expand service consumption have also been implemented in multiple areas, releasing the potential of service consumption. In 2025, service retail sales increased by 5.5% year-on-year, but growth in catering revenue slowed to 3.2%. Most retail commercial projects still opt for price cuts to reduce vacancies, with shop rents in key cities continuing the downward trend since the second half of 2024.

1. Bai Street Shop Rent: In the second half of 2025, the average rent of shops on major commercial streets in key cities decreased by 0.81% year-on-year

Chart: Average rent and month-on-month change of major commercial streets in key cities nationwide from 2018 to 2025

Source: China Real Estate Index System

In 2025, service consumption maintained rapid growth, especially in cultural and tourism-related sectors. Some landmark commercial streets in core business districts or those with cultural and tourism attributes remained relatively stable in terms of foot traffic and rent. However, with the slowdown in catering revenue growth and the impact of high-quality shopping centers, most commercial streets faced operational pressure, leading to rent declines. Based on survey data from 15 key cities’ main commercial streets, using 100 shops as samples, the Bai Commercial Street Shop Rent Index was compiled. In the second half of 2025, the average rent for shops on Bai Street was 24.05 yuan per square meter per day, down 0.47% month-on-month, with the decline expanding by 0.12 percentage points compared to the first half of 2025. The full-year decline was 0.81%, larger by 0.39 percentage points than the total decline in 2024.

2. Bai MALL Shop Rent: In the second half of 2025, the average rent of shops in major commercial circles (shopping centers) in key cities decreased by 0.34% year-on-year

Chart: Average rent and change of major commercial circles (shopping centers) in key cities nationwide from 2018 to 2025

Source: China Real Estate Index System

In 2025, the consumer market operated steadily, driving demand for shop leasing. Shopping centers performed better overall than commercial streets, but most projects still chose price reductions to stabilize occupancy, especially in newly opened projects in commercial circles, where existing projects faced competitive pressure and lowered rents. Based on survey data from 15 typical shopping centers in key cities, using 100 shops as samples, the Bai MALL Shop Rent Index was compiled. In the second half of 2025, the average rent was 26.99 yuan per square meter per day, down 0.22% month-on-month, with the decline expanding by 0.1 percentage points compared to the first half of 2025. The full-year decline was 0.34%, larger by 0.28 percentage points than in 2024.

3. Rent Trend: Policies to boost consumption will continue to strengthen, driving demand for shop leasing, but short-term rent declines may persist

In 2025, the consumer market grew steadily, but the growth rate slowed in the second half. The policy of replacing old products with new ones spurred rapid growth in retail sales of home appliances/3C, furniture, and other categories, but overall growth in catering slowed. Most retail projects still opt for price cuts to reduce vacancies, with rent declines in key cities widening.

Looking ahead, the “14th Five-Year Plan” proposes to “build a strong domestic market, accelerate the formation of a new development pattern,” and emphasizes “expanding domestic demand, supporting people’s livelihood and consumption, and closely integrating investment in physical assets and human capital.” It also aims to “promote more endogenous growth driven by domestic demand and consumption.” As the first year of the “14th Five-Year Plan,” 2026 benefits from policies to vigorously boost consumption and expand effective investment. Retail commercial spaces, as carriers of consumption, still have development potential, and demand for shop leasing is expected to continue releasing. However, short-term rent declines may continue. Retail operators need to adapt to trends, improve operational capabilities, operate prudently, and leverage digital technology and AI to enhance quality and efficiency. They should also seize opportunities in real estate finance to strengthen asset management and achieve high-quality development.

4. Market Performance in Key Cities: Consumption remains steady, but new supply of physical retail slows, overall shop leasing demand remains weak

(1) Cities like Chengdu and Shanghai see higher YoY growth in total retail sales, with faster market growth

Chart: Total retail sales and YoY growth rates in representative cities in 2025

Note: Tianjin’s total retail sales were not announced; in 2025, it increased slightly by 0.3% YoY. Suzhou’s full-year data is not yet available; from January to November, YoY growth was 2.8%. These two cities are not shown in the chart.

Source: City statistical bureaus, CREIS data

By city level: In 2025, Chongqing and Shanghai had relatively high total retail sales, each exceeding 1.6 trillion yuan; Beijing, Chengdu, Guangzhou, and Shenzhen ranged from 1.0 to 1.4 trillion yuan, with larger consumer markets; Hangzhou, Wuhan, Nanjing, Qingdao, and Changsha had retail sales between 500 billion and 1 trillion yuan; Nanchang and Haikou’s retail sales were below 300 billion yuan. In terms of YoY growth: Chengdu, Guangzhou, Shanghai, Wuhan, Changsha, and Hangzhou saw YoY growth rates higher than the national average, indicating faster market expansion, with over half of the representative cities exceeding 2024’s growth rate.

(2) Policies to boost consumption support growth

Boosting consumption remains the top priority for economic work in 2025, and the “14th Five-Year Plan” maintains this tone. In March, the Central Office and State Council issued the “Special Action Plan to Boost Consumption,” deploying 30 tasks across eight areas, including increasing income for urban and rural residents, supporting consumption capacity, improving service quality, upgrading bulk consumption, enhancing consumption quality, improving consumption environment, streamlining restrictions, and supporting policies. In October, the “14th Five-Year Plan” and the December Central Economic Work Conference emphasized deep implementation of consumption-boosting actions, with expectations that consumption’s role in supporting the economy will strengthen further in 2026.

Specific measures include expanding the scope of consumer goods replacement and renewal policies. In January, the National Development and Reform Commission and Ministry of Finance issued a notice on “Strengthening Large-Scale Equipment Renewal and Consumer Goods Replacement in 2025,” continuing to allocate long-term special bonds to support replacement policies, with funds favoring regions with good results in 2024. The scope of eligible consumer goods was expanded. By September, 300 billion yuan of central funds had been fully allocated in four batches, with sales exceeding 2.6 trillion yuan and benefiting over 360 million people. In 2026, the policies will continue, with further optimization in scope, subsidies, and implementation, reflecting “targeted efforts and quality improvements.”

Expanding service consumption policies also play a key role. In April, the Ministry of Commerce and eight other departments released the “2025 Service Consumption Quality and Benefit Action Plan,” with 48 specific measures covering catering, accommodation, tourism, new formats like micro-short dramas, and new scenarios. The goal is to expand service supply, innovate diverse consumption scenarios, improve service quality, and enhance consumer experience. In September, the same departments issued “Policies to Expand Service Consumption,” with 19 tasks across five areas, including fostering platforms, enriching high-quality services, stimulating new demand, strengthening financial support, and improving statistics. In January 2026, the State Council Information Office announced that the Ministry of Commerce will continue to implement service consumption quality initiatives and cultivate new growth points.

Additionally, in 2025, the central government introduced policies on auto consumption, cultural tourism, “new consumption” pilots, accelerating digital supply chains in retail, urban commercial upgrades, retail innovation, construction of city “15-minute convenience circles,” and cultivating international consumer centers.

Financial, tax, and fiscal policies also support consumption. On May 7, the People’s Bank of China and three other departments announced a package of financial policies to stabilize the market and expectations, including interest rate cuts, reserve requirement ratio reductions, and a 500 billion yuan re-lending facility for service consumption and elderly care, signaling strong support for market stability. By September 2025, loans in key areas of service consumption reached 2.8 trillion yuan, up 4.9% YoY. In June, the PBOC and six other departments issued “Guiding Opinions on Financial Support to Boost and Expand Consumption,” with 19 key measures supporting consumption capacity, expanding financial supply, releasing consumption potential, improving supply efficiency, and optimizing the environment. In August, the Ministry of Finance and others released the “Personal Consumption Loan Subsidy Policy Implementation Plan,” to better leverage fiscal funds to support consumption and reduce residents’ borrowing costs.

Local governments also issued policies focusing on boosting consumption, especially in service sectors, new economy, international consumption centers, and commercial upgrades, promoting continuous recovery and upgrading of the market.

Overall, in the past three years, China’s strategy of expanding domestic demand has remained unchanged, but the focus of policies has shifted from “restoring and expanding consumption” to “promoting stable growth,” with increasing policy strength. The goal has shifted from short-term countermeasures to long-term growth, reinforcing consumption as the main engine of the economy. Policies emphasize increasing high-quality supply, innovating consumption scenarios, and improving residents’ income and consumption capacity, stimulating market vitality and potential.

During the “14th Five-Year Plan,” China will continue to adhere to expanding domestic demand as a strategic foundation, forming a more demand-driven, consumption-led, endogenous growth model. 2026, as the opening year of the “14th Five-Year Plan,” will see continued efforts to boost consumption as a core means to expand demand, with policies on renewing consumer goods and cultivating new consumption growth points likely to be introduced gradually, ensuring steady growth of the market.

(3) Trends in shop supply in key cities: New retail projects in 15 cities decrease, pure commercial-office land transactions at recent lows, and new supply growth slows

New retail projects in 15 cities: 131 new openings in 2025, down 18% from 2024

In 2025, retail supply in 15 cities decreased, with a concentration in first-tier cities, and existing stock renovation becoming a major source of new openings. According to CREIS data, 131 new retail projects opened in 15 monitored cities in 2025, 28 fewer than the previous year, with a total area of about 11 million square meters, down 19% YoY. Stock renovation accounted for a significant portion of new openings, with 21 projects (16%) in 2025.

By city tier: First-tier cities saw 64 new retail openings, 7 fewer than in 2024, with about 5.3 million square meters, a slight increase of 4%. Shenzhen and Shanghai had relatively large new retail projects, each around 1.6 million square meters; Beijing and Guangzhou’s new openings were under 1.3 million square meters.

Second-tier cities had 67 new retail projects, 21 fewer than in 2024, totaling about 5.8 million square meters, a 30% decrease. Chongqing’s new retail volume was relatively large at 1.14 million square meters; Wuhan, Hangzhou, Nanjing, Changsha, and Suzhou ranged from 0.6 to 1 million square meters; Qingdao, Chengdu, Tianjin, Nanchang were under 350,000 square meters; Haikou’s new retail openings were below 30,000 square meters.

Development pace: In the first half of 2025, 44 new retail projects opened across 15 cities, accounting for 34% of the annual total, with May being the peak month (compared to June in 2024). No new openings occurred in February. In the second half, 87 projects opened, accounting for 66%, with September and December as peak months, consistent with previous years.

Commercial-office land: Transactions of pure commercial-office land in 15 cities have declined for five consecutive years, with future new projects likely to decrease further.

In 2021, transaction scale of pure commercial-office land in key cities (municipal level) dropped sharply. In 2025, the planned construction area for such land was 18.08 million square meters, a slight decrease of 0.4% YoY, at a near 10-year low, only 38% of the peak in 2020. First-tier cities’ transactions totaled 3.27 million square meters, down 34.9%; second-tier cities’ transactions reached 14.81 million square meters, up 12.8%.

(4) Demand trends for shops in key cities: overall weak leasing demand, stable retail formats, slight fatigue in catering

Policies to boost consumption have supported steady growth, and the operation of physical retail remains generally stable. In 2025, retail sales of goods in large-scale retail stores increased by 1.7% YoY. The foot traffic and sales in 78 monitored pedestrian streets and commercial circles increased by 5.2% and 4.3%, respectively. Driven by market growth, some brands still seek to expand stores, and operators actively optimize existing projects and brand mixes to attract consumers. Shop leasing demand in key cities remains active but overall weak.

Meanwhile, residents’ consumption behaviors in 2025 show: (1) good sales of “replace old with new” products, (2) accelerated demand for upgraded goods, (3) stable daily consumption with a focus on value-for-money, and (4) potential in service consumption.

Due to changes in the market and consumer characteristics, brand store expansion strategies vary across formats. Some retail formats in key cities remain relatively stable. High-rent formats like fashion and cosmetics show resilience; outdoor sports, trendy brands, designer brands are expanding; home appliance/3C brands are also expanding. Categories that satisfy emotional or social needs, such as anime, trendy toys, pets, and lifestyle brands, also have expansion demand.

Catering formats are slightly fatigued but remain main tenants in shopping centers. Popular categories include baked goods, coffee, tea, light meals, and local specialties. Some brands are launching new concepts or opening innovative stores. However, overall, catering brands face high turnover, with closures observed across multiple categories.

Office Rent Index Analysis

1. Rent Changes: In Q4 2025, key cities’ office rents decreased by 0.44% quarter-on-quarter, with an annual decline of 1.82%

Chart: Average office rent and QoQ change in key cities nationwide from 2019 to 2025

Source: China Real Estate Index System

In 2025, some cities increased office supply compared to 2024, but demand remained weak, leading to an oversupply situation and continued rent declines. Based on survey data from major commercial districts, the average office rent in Q4 2025 was 4.53 yuan per square meter per day, down 0.44% QoQ, with the decline widening by 0.11 percentage points from Q3. The full-year decline was 1.82%, slightly narrower than 2024 by 0.03 percentage points.

2. Rent trend: Office market may continue to adjust, with short-term downward pressure on rents

In December 2025, the Central Economic Work Conference emphasized stabilizing employment, enterprises, markets, and expectations, and promoting qualitative and quantitative growth, including “accelerating the cultivation of new drivers like AI+.” Looking ahead, macro policies in 2026 are expected to support the economy, with demand from new economy and AI sectors likely to grow, gradually restoring some office markets, especially in tech-led districts. However, the overall demand remains weak, and the market may continue to adjust, with short-term rents possibly declining further.

In the era of stock, competition in office real estate shifts from “space leasing” to “value operation.” Operators need to focus on building industrial ecosystems and upgrading services, especially for tech, finance, professional services, high-end manufacturing, and biotech sectors, to attract quality tenants. Updating existing projects with mixed-use functions like commercial and hotels, enriching amenities, and enhancing asset value will help create resilient assets capable of weathering cycles.

3. Demand trends in key cities: Grade-A office vacancy rates rising in Nanjing, Chengdu; TMT sector shows large leasing demand

(1) Vacancy rates: In 2025, increased supply and weak demand led to higher vacancy in some cities

Chart: Grade-A office vacancy rates in key cities in 2025

Source: CREIS data

Since 2025, some cities saw increased office supply, with weak leasing demand causing vacancy rates to rise. In Q4 2025, Guangzhou’s vacancy rate was lowest at 11.8%. Among second-tier cities, Hangzhou and Suzhou had vacancy rates of 11.6% and 16.5%, respectively. Cities like Chongqing, Tianjin, Qingdao, Changsha, and Wuhan had higher vacancy pressures. Overall, vacancy rates in major cities increased compared to the previous year’s Q4, including Guangzhou, Shanghai, Shenzhen, Suzhou, Chengdu, Nanjing, and Wuhan.

(2) Leasing cases: Financial, TMT, and business services sectors remain active, with TMT occupying over 60% of large leasing cases over 10,000 sqm

Chart: Industry distribution of major leasing cases in 2025

Source: CREIS data

In 2025, CREIS tracked 366 large leasing cases, with financial, TMT, and business services sectors accounting for nearly 60%. Specifically, financial sector had 87 cases (24%), TMT 69 cases (19%), business services 46 cases (13%). Retail/trade, transportation, and logistics each had 20-30 cases, totaling about 14%. Other industries had fewer than 20 cases, about 31% combined.

For leases over 10,000 sqm, TMT accounted for 14 cases (64%). Smaller-scale demand also increased, with 178 cases under 2,000 sqm, representing 49%, up 4.9 percentage points from 2024.