Average Office Rents In Hong Kong Down 0.2% in July

HONG KONG – With overall net office absorption remaining in negative territory, average office rent in the Chinese territory dipped from HK$56 psf per month in June to HK$55.8 psf per month, according to a new report published by Jones Lang LaSalle (JLL) on Thursday (19 August).

“Despite a handful of buildings recording slight rental growth during the month, overall net effective rents fell 0.2 percent month-on-month, as the higher vacancy rate exerted downward pressure on rents,” said the property consultancy.

“Among the major office submarkets, Wanchai / Causeway Bay and Kowloon East experienced a relatively larger rental decline.”

There were several major leasing deals during the month under review – A 92,500 sq ft office space at The Quayside’s low zone was taken up at the high HK$10 psf range. A 11,700 sq ft workspace at the low zone of Kowloon Commerce Centre Tower B was leased within the mid HK$20 psf range, while a 10,600 sq ft office space at Chinachem Golden Plaza’s low zone was taken up within the high HK$20 psf range.

Moreover, JLL revealed that Hong Kong’s broader office market witnessed a net absorption of -89,000 sq ft in July. Still, the figure is slightly better than the -97,800 net absorption recorded in June.

“There continued to be some corporate downsizing activities though they have abated recently,” observed the real estate consultancy.

Still, JLL noted that the higher availability of office space provided more options to occupiers, some of which grabbed the opportunity to reconfigure their workspaces. For example, healthcare firm Bupa leased a gross floor area (GFA) of 92,500 sq ft at The Quayside in Kwun Tong to consolidate its offices.

In addition, the overall office vacancy rate in Hong Kong inched up to 9.6 percent in July from 9.5 percent during the previous month. Nonetheless, that in Central was unchanged at 7.4 percent.

“Quality office buildings in the submarket have been met with greater occupier demand than the rest of the market. Notably, Henderson Land announced that The Henderson, a premium Grade A office building slated for completion in 2023, has secured its first tenant,” explained the property consultancy.

In terms of office sales, Central’s investment market has become more energetic. “The whole block of C Wisdom Centre was sold for HK$432 million (HK$18,084 psf), while a low-level floor at The Center was offloaded by a local investor for about HKD 674 million (HKD 27,000 per sq ft),” added JLL.