On the premise of sustained and stable release of market demand in the future, we expect the overall vacancy rate to peak in 2022, exceeding 28%. During the three to five years afterward, we expect gradual absorption of vacant space to drive down the vacancy rate.
In H1 2020, due to weak market demand and the pandemic, landlords reduced rents to attempt to attract high quality tenants. Overall market demand gradually recovered after Q2 2020. In 2020, the average quarterly net absorption reached 26,000 square meters (280,000 square feet), nearly returning to the 5-year historical average of 32,000 sq meters (344,000 square feet) per quarter. New market demand mainly comes from new leases and expansion of online education companies, and the replacement of Grade A tenants with former Grade B tenants taking advantage of lower rents. As the vacancy rate remained high, rents continued to decline in H2 2020.