Hong Kong Office Market Currently Driven By Upgraders
HONG KONG – Jones Lang LaSalle (JLL) revealed that new rental activity in the city’s Grade A office sector is being propelled primarily by companies looking to upgrade their office space amidst more completions this year, reported Mingtiandi on Tuesday evening (30 May, SGT).
The property consultancy’s Managing Director in Hong Kong Alex Barnes said new office completions are prompting tenants to relocate and upgrade their workspaces, with about 3.2 million sq ft of Grade A office space poised to enter the market this year.
“Tenants are viewing it as an opportune time to upgrade on the back of more choices, variety of floor plate sizes, and the latest green and technological facilities,” he explained. However, the new office completions are also expected to increase vacancy rates.
Based on JLL’s latest Market Monitor report, the overall office vacancy in Hong Kong rose to 12.3 percent at the end of April from 12 percent during the previous month and 9.4 percent in the same period last year. Nonetheless, the amount of vacant office space in Central remains unchanged at 9 percent.
Moreover, net office absorption reached -245,100 sq ft as tenants relinquished more office space than they leased in April.
In addition, average monthly rents in Hong Kong dipped 0.3 percent month-on-month to HK$54.50 psf in April following a 0.2 percent monthly dip in March.
Among the major office submarkets, average office rents in Central and Kowloon East both declined marginally by 0.5 percent in April, while that in Tsim Sha Tsui climbed by 0.3 percent.
Furthermore, the month of April saw several new office rental deals. Doo Group rented an entire office floor at The Millennity in Kwun Tong with a gross floor area of 12,600 sq ft, as the Singapore-based financial company upgraded and consolidated its workspace within the same district.
Also, two mid-zone office units at Convention Plaza in Wan Chai were acquired by Surrich International for HK$255 million, or HK$31,075 psf based on the commercial property’s gross floor area (GFA), for self-occupation. Surrich is a fully-owned offshore unit of Guolian Group, a state-owned enterprise headquartered in Wuxi, China.