Swire Properties Reduces Office Rents To Maintain Office Occupancy
HONG KONG – Operating figures recently published by Swire Properties, one of the top office lessors in the city, suggest that Hong Kong office landlords may need to slash office rents by around 12 percent to maintain the occupancy of their prime office buildings, reported Mingtiandi on Sunday evening (6 August, SGT).
According to the office landlord’s latest bourse filing last week, the vacancy rate of its Pacific Place complex was just 3 percent at the end of H1 2023, but the rental rates of new office leases and renewals at the commercial property were reduced by 12 percent on average from earlier rates.
In addition, Swire Properties registered negative rental reversions across all of its major office assets in Hong Kong, including an overall 9 percent decline in rental rates at its Taikoo Place project in Quarry Bay.
Also, 44 percent of the office lessor’s 1 million sq ft of office space at its Two Taikoo Place development in Quarry Bay still remain vacant almost a year after the office building was completed last year.
Comparatively, One Taikoo Place was fully occupied just two months after it obtained its occupancy permit for its one million sq ft of office space in September of 2018.
While Swire Properties’ office occupancy in Pacific Place was steady, it managed to slash the office vacancy level at its Taikoo Place portfolio to 94 percent at the end of H1 2023 from 96 percent at the end of 2022. The office landlord managed to achieve this even though the average office vacancy rate in the Hong Kong East submarket, which encompasses Taikoo Place, rose from 11.2 percent to 12.5 percent over the same period as per data from Jones Lang LaSalle (JLL).
Statistics from the real estate consultancy also showed the office vacancy in Greater Central, which also includes Pacific Place, increased to 9.4 percent at the end of H1 2023 from 8.8 percent during the end of 2022.
Furthermore, JLL disclosed that the overall office vacancy in Hong Kong edged up to 12.6 percent from 12.2 percent over the same period.
