HK Office Rents Expected To Slide Up To 1.5% In Q4
HONG KONG – During the third quarter, the Chinese territory’s office market recorded a net absorption of 327,700 sq ft, the 1st positive office take-up since Q3 2019, and this trend is forecasted to continue during the last quarter of this year, according to a Cushman & Wakefield (C&W) report that was published on MediaOutReach on Tuesday (12 October).
Office leasing activity in Hong Kong also picked up with financial institutions and coworking space providers continuing to lead the office leasing recovery during the period under review.
“With leasing activity picking up in various areas across Hong Kong and rising demand for business centre and coworking space, Q3 2021 recorded the first positive net absorption. However, significant new supply of 2.75 million sq ft launching into the decentralized submarkets in 2022 will raise the upcoming availability,” said C&W’s Managing Director in Hong Kong, John Siu.
Thanks to the better office leasing activity, office rental decline eased from a quarterly dip of 1.4 percent in Q2 to 1.2 percent during the prior quarter, said the real estate consultancy, which forecasted office rents in the city would decline by between 1 percent to 1.5 percent in Q4 2021.
Another positive sign is that the overall office space availability across Hong Kong fell marginally to 13.9 percent because of an increase in leasing activity, and overall office space availability is projected to remain stable during the 4th quarter of this year.
Aside from that, surrendered office supply in Hong Kong declined, while fitted and subsidized office stock remains appealing to cost sensitive occupants, said the real estate consultancy.
“Compared to the relatively low levels of tenant movement in Q2, we saw a resurgence of transaction activity in Q3 with several notable deals concluded by tenants from the Banking & Finance (27 percent), Insurance (15 percent) and Business Centre / Co-working (12 percent) sectors,” noted C&W’s Head of Office Services in Hong Kong, Keith Hemshall.
“As a result, the amount of office space being surrendered dropped 12 percent quarter-on-quarter equating to a reduction of 62,000 sq ft in total,” he added.