2 Office Trends To Take Advantage Of In HK

HONG KONG – Office rents and capital values in the Chinese territory are expected to recover by 2022, but there are 2 current trends that occupants and property owners should be aware of, according to a commentary written by Colliers International that was published on the South China Morning Post on Tuesday noon (9 November, SGT).

Number one is that landlords who maintain better-quality office buildings perform better in terms of rents and occupancy levels. Lastly, occupants are likely to prefer premium office space that can be leased with the same budget as the rental gap between Central and other noncore areas narrow.

Colliers said that decentralization or the migration of tenants from a centralised to a non-core area remains an effective strategy if cost saving is the primary objective. However, the rent gap between Hong Kong’s Central and other areas has narrowed at present, and when coupled with declining rents in the central business district (CBD), the consultancy sees a chance for occupiers to embark on a flight-to-quality.

“The chance to seize a more premium space, in a better location using the same budget, is something that a tenant would find hard to refuse,” said Nigel Smith, Managing Director of Colliers International in Hong Kong.

“This opportunity is only amplified when you compare it to the average effective unit rent of a solid grade A building of two years ago, and how a tenant can now commit the same cost, or even lower, and secure a space in one of Hong Kong’s most premium buildings.”

This is positive news for would-be tenants and landlords in Central. On the other hand, fringe and noncore commercial property owners should think of initiatives to improve the value of their office buildings to increase their occupancy.

“This can be achieved in many ways, such as improving infrastructure and tech applications to enable seamless business operations while ensuring hygiene and staff well-being. Some buildings in Central provide contactless services like contactless lifts, e-signatures for visitors and e-booking through apps,” he noted.

As evidence that better quality buildings are more desirable, the vacancy of Grade A office space in Central reached 8.1 percent in July, but the figure falls to 6.4 percent if 10 office buildings (mostly strata-titled and over 30 years old) are excluded.

Another way to attract tenants is for landlords to consider adding amenities to their office buildings, like gym, eateries, and coworking space. Some commercial property owners in the CBD are already offering flexible workspace in their properties in a bid to entice and retain occupants. For instance, Hongkong Land has launched its Centricity workspace.

On the work from home (WFH) trend, Colliers highlighted that locals will likely want to return to the office, given the small homes in Hong Kong, in addition to the short, effective, and cost-effective commutes there.