AI Sector Drives Surge in Shenzhen Office Rentals

(Yicai) Jan. 16 -- Shenzhen’s fast-growing artificial intelligence sector has created surging demand for office leasing, with the tech, media and telecoms sector now accounting for nearly one-third of the city’s total leasing demand in terms of area.“It’s foreseeable that the strong momentum of innovative development driven by the AI industry will become one of the most important sources of incremental demand for Shenzhen’s office market,” Zhang Xiaoduan, vice president of research for south and central China markets at US-based real estate services firm Cushman & Wakefield, told Yicai.Over the past three years, TMT sector demand for rentals properties has steadily increased, rising from 19 percent of total leasing in 2023 to 30 percent today, the fastest growth among China’s four first-tier cities.The southern city’s AI sector is now worth more than CNY360 billion (USD51.5 billion), accounting for nearly 40 percent of Guangdong province’s total.Shenzhen is home to more than 2,800 AI-related enterprises, putting it among the top AI cities nationwide.Demand from AI-related businesses is being driven by the expansion of leading enterprises, rapid growth of small- and medium-sized companies, and flexible office requirements from startups, Zhang pointed out.“The AI sector’s continuous development of hardware, software, and industry-specific applications is spawning an ongoing stream of innovative solutions,” Zhang said.A large share of Shenzhen’s AI-related office leasing demand comes from startups and SMEs, highlighting the city’s dynamic innovation and entrepreneurial ecosystem, he added. AI-related firms accounted for 5.7 percent of all office leasing and 4.6 percent of Grade-A office leasing by area, with both reaching 6.5 percent by number of leases, according to data from Cushman & Wakefield.This demand is likely to keep growing. According to a policy document issued by the Shenzhen government earlier this year, the city will cultivate over 1,000 high-growth AI startups by the end of next year.The need for office leasing in Shenzhen has also led to a high net absorption volume, which measures the change in occupied space in a given period, with Grade A offices reaching 664,000 square meters in 2025, the highest since 2021 and 17 percent higher than the average of the past five years, according to data from UK-based realtors Savills.Editors: Tang Shihua, Tom Litting