Hong Kong Office Leasing Grew Again in October as Occupiers Grabbed Bargains

Tenants in Hong Kong’s Grade A office market took up 152,500 square feet (14,168 square metres) more than they gave back in October, marking a third straight month of positive take-up, according to JLL.

The overall vacancy rate of the city’s Grade A offices eased to 12.6 percent from September’s reading of 12.7 percent, the consultancy said in its Hong Kong Property Market Monitor report. Kowloon saw the biggest improvement in vacancy rates, with commercial hub Tsim Sha Tsui dropping 0.4 points to 9.5 percent and Kowloon East inching down 0.1 points to 19.1 percent.

Ken Tang, JLL’s head of office leasing advisory for Kowloon, highlighted the appeal of the peninsula’s redeveloping eastern portion as occupiers seek quality office spaces in the area, where rents average around 30 percent of those in the city’s prime Central district.

“Kowloon East, in particular, with its diverse and high-quality office space options which cater to different preferences and requirements, is another popular option to tenants who are looking for large space for their main office,” Tang said Monday in a release.

More Empty Space in Central

On Hong Kong Island, October delivered mixed results for empty office space. Vacancy stood at 9.8 percent in Central and 13.3 percent in Hong Kong East — up 0.2 points in each — while the level of available desk space in Wan Chai/Causeway Bay dipped 0.3 points to 9.8 percent.

The city’s overall vacancy rate stabilised in August at 12.8 percent after four consecutive monthly increases and has not risen since, according to JLL data.

Net effective monthly rents in October averaged HK$52.60 ($6.75), a 0.5 percent decline from September and a 2.2 percent slide over a three-month period.

“Among the major office submarkets, Central and Wan Chai/Causeway Bay witnessed rental drops of 0.2 and 1 percent, respectively, while Tsim Sha Tsui’s rent remained firm,” said Cathie Chung, senior director of research at JLL in Hong Kong.

Puma Pounces on Airside Offering

Among October’s new leases, Puma took up 37,500 square feet of gross floor area in a low floor at Nan Fung Group’s Airside complex in Kai Tak, paying a reported monthly rent of between HK$20 and HK$25 per square foot. The sportswear designer is relocating its Asia Pacific headquarters from the 1980s-era Centre Parc in Kowloon Bay.

Other notable lettings last month included 35,300 square feet of gross floor area at The Harbourfront Two in Kowloon East for about HK$20 per square foot and 15,000 square feet of leasable area at Sun Hung Kai Centre in Wan Chai for around HK$40 per square foot.

In the strata market, Pak Tak International sold a unit on a mid-zone floor at Lippo Centre Tower 2 in Admiralty for HK$38 million (HK$20,000 per square foot of gross floor area). The garment exporter is leasing back the unit for one year after reportedly taking a 47 percent loss on the sale of the 1,900 square foot space it bought five years ago.