HK Grade A Office Vacancy More Than Doubles
HONG KONG – New data from CBRE showed that the amount of vacant Grade A office space in the Chinese territory has surged to 9.6 million sq ft in March 2022 from 4.2 million sq ft in the same period 3 years ago, reported Agence France-Presse (AFP) on Thursday afternoon (15 September, SGT).
The real estate consultancy said the record-high office vacancy was due to the office space reduction by almost 950 firms.
CBRE disclosed that departing companies from the US, Europe, the Middle East and Asia were behind the lower office occupancy. On the other hand, mainland Chinese companies increased their office footprint marginally.
However, researchers from the real estate consultancy warned that demand for office space could remain weak even if COVID-19 restrictions are withdrawn.
The statistics add to warnings that Hong Kong’s allure as a commercial hub has been impacted by the massive protests and a subsequent crackdown. Moreover, pandemic restrictions have kept the Chinese territory internationally isolated, while rivals like Singapore have reopened.
Over the same 3-year period, office occupancy dropped by 2.3 million sq ft to 73 million sq ft. This made it the city’s “biggest and longest office market downcycle in history,” said the property consultancy.
At the same time, office rents plummeted by almost 30 percent.
“The economic recession has prompted businesses to look at the office costs more carefully and reduce office footprint over the past few years,” noted Marcos Chan, Research Head at CBRE Hong Kong.
Still, CBRE expects Hong Kong to see “gradual and moderate” growth in office demand after the city eases travel curbs, with Chinese companies as key growth drivers.
“New and expansionary demand from mainland Chinese companies will grow at a rate of no less than 770,000 sq ft per annum,” added CBRE.