ByteDance headquarters in Beijing [AFP]
ByteDance headquarters in Beijing [AFP]

Even as China's real estate slump drags into its fourth year, the office market in Zhongguancun — known as China's Silicon Valley — is thriving, driven by strong demand from AI and other advanced technology companies.

Global real estate consultancy Knight Frank said in a recent report that Zhongguancun is the only submarket in Beijing where office rents have risen, according to the South China Morning Post on Saturday.

Knight Frank data show the average monthly rent for Grade A office space in Zhongguancun reached 251.4 yuan ($37) per square meter in the second quarter, up 0.3 percent from the first quarter.

That makes it the second most expensive office district in Beijing, behind only the Financial Street area.

Companies that leased new office space in Zhongguancun during the second quarter include ByteDance, the parent company of TikTok, along with leading Chinese AI firms DeepSeek, Moonshot AI, Enflame Computing and Shuanmiao.

Technology, media and telecommunications firms accounted for 49 percent of Beijing's office leasing market in the second quarter, with financial firms a distant second at 17 percent.

The influx of tech tenants is pushing vacancy rates sharply lower. The vacancy rate for Grade A offices in Zhongguancun fell to 8.2 percent in the second quarter, down from more than 14 percent at the end of last year. By contrast, Beijing's citywide average vacancy rate edged up 0.1 percentage point from the previous quarter to 15.9 percent.

"This year marks the arrival of the AI super cycle, and it is only just beginning," Knight Frank said, adding that leasing demand led by technology companies "is expected to continue in Beijing over the next three to five years — and may even accelerate."

The firm said Beijing's office market has shifted from "passive adjustment" to "structural recovery," though it cautioned that this does not yet signal a full-scale market rebound.

Knight Frank added that "overall trends still need to be closely monitored," forecasting that a genuine recovery would likely emerge in late 2029 or early 2030.


mokiya@heraldcorp.com