Hongkong Land Converts Office Space Into Restaurants
HONG KONG – To increase the attractiveness of its office buildings here to potential tenants, landlord Hongkong Land is adding more popular eateries to its portfolio, including by transforming office spaces into restaurants, reported the South China Morning Post (SCMP) on Wednesday morning (22 December, SGT).
In its latest move, the property developer turned about 11,000 sq ft of office space on the 3rd level of Alexandra House into food and beverage (F&B) outlets. The commercial space now contains a French restaurant with a terrace known as Ami/Wood Ear and the soon-to-open Chinese eatery Grand Majestic Sichuan.
Previously, the office space was occupied by law firm Deacons, a major long-term tenant that has consolidated its workspace on a higher level in the same office building. The real estate developer decided on the conversation as the terrace space was not fully used, explained Raymond Chow, Executive Director at Hongkong Land.
He pointed out that having sought-after eateries shows that corporate tenants “operate in a prestigious portfolio and (this) helps them to attract talent”.
“I used to say you can do 12 meetings a day within our portfolio (given the proximity of our office space to eateries), and now it’s 13 meetings with our dining facilities,” Chow added.
Now, Hongkong Land has 70 F&B outlets operating within its commercial properties in Central, including 6 Michelin-starred restaurants. Eateries now make up 30 percent of its retail space and about 12 percent of the developer’s entire properties in the city’s financial district.
Chow said they are not sacrificing rental income in their conversion of office space into eateries, as the move is intended to combat rental depreciation and shrinking corporate headcounts. “We look at the whole portfolio to improve the ecosystem.”
According to the latest industry data, the office buildings of Hongkong Land saw a vacancy level of 4.8 percent versus 7.3 percent for Central’s overall office market. However, the developer’s interim report revealed that its average office rents declined from HK$121 psf in 1H 2020 to HK$118 psf during the first half of this year.
Meanwhile, data from Cushman and Wakefield (C&W) shows that office rents of Grade A buildings in prime Central dropped 4.7 percent this year, but the property consultancy projected that rents could recover by as much as 1 percent come 2022.
In a bid to increase demand for its commercial property portfolio in Central, Hongkong Land has also launched an online leasing platform called The HKL Broker App last September. The app shows real-time information like prices, availability, floor plans, and building specifications to would-be tenants.
“We are very busy after the launching of the app. We will never stop looking at our assets to make them look better,” said Neil Anderson, Director & Head of office and commercial property at Hongkong Land.
As the largest landlord in Central, Hong Kong’s financial district, the company holds 4.84 million sq ft of prime office and retail properties there. These include 11 Grade A office buildings like Chater House, Landmark Prince’s, and Exchange Square, which houses major tenants such as JPMorgan Chase and the operator of local bourse, HKEX.