Hong Kong’s world-leading office rents continue to encourage multinationals to migrate to the city’s emerging business districts with engineering and consumer products powerhouse 3M said to be the latest global firm to flee Hong Kong Island for newer buildings with lower rents.
The Minnesota-based maker of Post-It notes and Scotch-Brite has agreed to lease an upper floor in the Manhattan Place in Kowloon East, according to a report in the Hong Kong Economic Times, leaving behind its current space in the 38-year-old Victoria Centre in Causeway Bay.
The move by 3M, which has a market capitalisation of $93 billion, follows the sale by the manufacturer of its Causeway Bay offices to private equity firm SilkRoad Property Partners in June of this year..
Selling Up and Moving Out
The reported lease deal will see 3M move out of the Victoria Centre to take up a 20,850 square foot (1,937 square metre) floor in the 2008-vintage tower at 23 Wang Tai Road in Kowloon East. 3M is said to be paying monthly rent of HK$688,050 ($87,709) per month for its new accommodation.
The US company, which made its name making sandpaper and now has operations in over 60 countries, will be paying the equivalent of HK$33 per square foot per month for its new home in the 63,000 square metre tower.
3M agreed to sell its current base on the fifth floor of the Victoria Centre at 15 Watson Road, along with two further units on the fourth and sixth floors, to SilkRoad Property Partners just over two months ago.
The Singapore-headquartered firm purchased the offices for a combined HK$500 million, paying $10,812 per square foot for the 46,241 square feet of leasable area, according to a local media report. Colliers International is reported to have brokered the deal, according to market sources.
Shifting into More Comfortable Quarters
3M’s new offices at Manhattan Place are a 15-minute walk to Kowloon Bay metro station, while the airport is a 30-minute drive away.
Located next to One Kowloon and 200 metres from Exchange Tower, the tower comprises 40 storeys of grade A office space and also includes a retail podium.
In its new home, 3M will be riding the lifts with executives from Miele, Ralph Lauren, AXA, TMF Group, Nespresso, and Hong Kong’s Octopus transport card system.
Manhattan Place was developed by James Tien Pei-chun-controlled Manhattan Holdings Group, which also developed the 18-storey Manhattan Centre in the Kwai Chung area of the New Territories, and was designed by the same architectural practice which created the HKSAR Government Headquarters in Admiralty.
Kowloon East Pulls in Cost-Conscious Corporates
3M’s move across Victoria Harbour follows a trend that has seen a number of large multinationals moving from office locations on Hong Kong island to newer properties in the former industrial area of Kowloon East and other emerging commercial hubs.
In June last year HSBC leased 70,000 square feet in Mapletree Bay Point in Kowloon East, with insurance giant Cigna having leased a 35,000 square foot lower floor in the building, which has since been rebranded as the International Trade Tower.
Also last year, JP Morgan agreed to lease over 30 percent of The Quayside, an 883,897 square foot project being jointly developed in Kowloon East by Link REIT and Nan Fung.
Local firms have also been headed across the harbour, with Hong Kong’s FTLife Insurance said to have agreed a lease on four office floors in Kowloon East as it plans to relocate from Sheung Wan.
The reported deal will see FTLife pay HK$4.41 million per month to rent a 126,000 square foot space in the LVGEM Neo project in the Kwun Tong area of Kowloon East.
Paying the equivalent of HK$35 per square foot per month for its new space, the insurer will be saving as much as 50 percent compared to the average rentals of HK$68 to HK$70 per square foot per month at its current location in the 42-year-old Wing On Centre on Connaught Road in Sheung Wan.