Hong Kong Office Leasing Pulls Back in November as Vacancy Nears 12%

Hong Kong’s Grade A office market in November saw tenants give back 44,400 square feet (4,125 square metres) more than they took up as leasing activity slowed towards year-end and large spaces became available in some submarkets, according to JLL.

The overall vacancy rate rose to 11.6 percent during the month from 11 percent at the end of October and 10.5 percent in September, driven by the completions of Sino-Empire joint venture Landmark South in Wong Chuk Hang and Sun Hung Kai Properties’ The Millennity at 98 How Ming Street in Kwun Tong, the property consultancy said in its latest Market Monitor report.

The vacancy rate in the prime Central district rose to 8.7 percent from 8.4 percent in October, and the share of empty space in Wan Chai/Causeway Bay climbed to 10.1 percent from 9.7 percent a month earlier.

Kowloon commercial hub Tsim Sha Tsui’s vacancy rate eased to 10.9 percent last month from 11 percent, while Kowloon East continued to see the highest rate with 18.2 percent, up from 16.7 percent.

Decentralised Areas Attract

Average monthly office rent in November fell by 0.7 percent to HK$55.50 (now $7.12) per square foot after a 0.6 percent drop the previous month, according to the report, which was prepared by executive director of research Nelson Wong and research analyst Terrence Zhou.

Among major office submarkets, rents in Central and Wan Chai/Causeway Bay both fell by 0.6 percent from a month earlier, while rents in Hong Kong East recorded a 0.5 percent decline.

In November’s biggest transaction, Konica Minolta Business Solutions leased an entire floor with 36,000 square feet of space at the newly completed Airside in Kai Tak. The division of the Japanese tech company will relocate and upgrade from its previous location at Eastern Centre in Quarry Bay.

“High-quality new supplies in decentralised areas continued to attract occupiers looking for more affordable and newer options,” JLL said.

Admiralty Centre Uptick

In the capital market, one unit on a low-zone floor of Admiralty Centre Tower II was reportedly sold at a consideration of HK$20 million (HK$18,904 per square foot of gross floor area) by a mainland securities company.

If accurate, the sale price represents a 4 percent uptick from the five-year low of HK$18,161 per square foot paid by Hong Kong-listed developer Tomson Group to acquire the entire 13th floor of Tower II in a deal announced in August.

The floor in the 22-storey building atop the Admiralty MTR interchange had first been put on the market for a price equivalent to HK$29,000 per square foot late last year, before the price was slashed to HK$20,000 in early 2022, according to a report by local financial daily HKET.