HK’s Office Absorption Hits 185,500 Sq Ft In Q4 2021
HONG KONG – The office leasing market of the overall Greater Bay Area (GBA) stabilized, with rental drops slowing and total office absorption reaching 513,000 sq ft in terms of net floor area (NFA) during the 2nd half of the year, according to a Cushman & Wakefield (C&W) report that was published on Media OutReach on Tuesday afternoon (14 December, SGT).
Based on the property consultancy’s Hong Kong and Greater Bay Area (GBA) Property Market 2021 Review and 2022 Outlook, Hong Kong’s Grade A office market has rebounded from its sluggish situation during the first half of the year for 2 straight quarters.
As a matter of fact, office absorption in the city has reached 185,500 sq ft (NFT) in Q4 2021. While overall net absorption plunged to -578,700 for the entirety of the year, this is a significant increase from the -2.3 million sq ft seen during the previous year.
In particular, the financial and insurance sector dominated new office leasing deals as they accounted for 42 percent of all new rental transactions in Q4 2021.
However, overall office rents across Hong Kong have declined by 4.7 percent for the whole of 2021, albeit this is a lesser contraction than the 19.3 percent drop witnessed in 2020. The better state of the city’s economy and the positive absorption in the office market for H2 2021 have brought office space availability down by 80 basis points to 13.6 percent during the fourth quarter versus 14.4 percent in Q2 2021.
Aside from that, the amount of relinquished office supply has declined by 49.3 percent from its peak of 724,000 sq ft (NFA) during the first quarter of the year to 367,000 sq ft in Q4 2021.
“With the completion in 2022 of over 2 million sq ft of new grade A office space in Two Taikoo Place in Hong Kong East, 98 How Ming Street in Kowloon East, and Airside atop Kai Tak MTR Station, we expect overall availability to increase to 16 percent to 17 percent by the end of the year and accordingly, for average rents to drop by 1 percent to 3 percent,” said Keith Hemshall, Executive Director and Head of Office Services in Hong Kong at C&W.
“That said, we expect that anticipated border re-opening will drive an improvement in the economy and the demand for office space will increase with an estimated net take up of 300,000 – 500,000 NFA for 2022,” he forecasted, adding that they expect the financial and insurance sector as well as coworking space operators to be active in Hong Kong’s office leasing market.
