DeepSeek’s AI boom is rescuing China’s empty office towers

China’s AI boom is doing something unexpected: it’s bailing out the country’s struggling commercial real estate market. UBS data shows that in March, AI companies leased three times as much office space as they did a year earlier. In the wake of DeepSeek’s rise and Alibaba’s full pivot to AI, tech hubs like Hangzhou and Shenzhen have seen vacancy rates for Grade A office space drop from a peak of 30% at the end of 2025 to around 20%, according to the bank.

It’s not just corporate expansion and local government rent subsidies propping up the market. A court ruling in late April also helped keep desks filled: a Hangzhou court decided that companies cannot directly replace employees with AI, saving the job of a quality inspector tasked with checking the accuracy of AI outputs. AI companies are also pulling in accountants, consultants, and lawyers, all of whom need their own offices.

But how long this recovery lasts is an open question. UBS analysts note that the surge in AI office demand in March wasn’t for software engineers — it was for back-office and support staff. Those are exactly the jobs the industry expects AI agents to eventually eliminate. Zhipu AI, another major Chinese AI player, has been expanding rapidly, but even its latest models are designed to automate the kind of work those new hires are doing.