BNP Paribas, a $2.4 billion financial giant, has decided that it may not have the cash to maintain an address in Hong Kong’s Central district and is picking up stakes for Quarry Bay.
The company, which is the world’s sixth-largest financial services institution, has recently signed a lease for eight floors in Swire Properties’ Lincoln House in Taikoo Place covering some 100,000 square feet (9,300 square metres), according to a report recently in the Hong Kong Economic Journal. The new lease in Island East makes the French bank the latest multinational company to look for alternatives to the atmospheric rents in Hong Kong’s traditional business hubs.
With Hong Kong’s office rents now ranking as the world’s highest, according to a recent report, companies that once fought for a Central address have been looking for more affordable alternatives in Quarry Bay, southern Hong Kong island and Kowloon East as developers rush new office buildings onto the market there.
France’s Biggest Bank Set For Another Decade in Taikoo Place
BNP Paribas, which has nearly 200,000 employees worldwide, has decided to put much of its Hong Kong team in Quarry Bay for at least another decade. The company’s new ten year lease gives it rights to floors six through eight, and floors 14 through 18, taking up eight out of 21 office floors in Lincoln House. BNP Paribas had already been parking part of its back-office operations in Taikoo Place for at least several years, according to sources familiar with the firm’s activities.
The circa 1998 structure known for its panoramic views of Victoria Harbour is already home to multinationals including ANZ Bank, Gucci and design firm Benoy.
The BNP team members who are relocating will be coming from space the bank currently leases in Two IFC and Three Exchange Square in Hong Kong’s Central district, although the company will be retaining some high level floors in IFC 2 for a portion of its business. The total monthly rent on the Lincoln House lease is said to be HK$4.5 million, which works out to around HK$45 per square foot per month.
Moving Seven MTR Stops to Save 75%
By relocating from Central to Quarry Bay the European financial institution will be moving its team just over a half-hour commute from its current headquarters, but it also could be saving nearly 75 percent on its rent.
Just over one month ago a pair of tenants at Two IFC were reported to have signed leases for HK$200 ($25.63) per square foot per month, setting a post-2008 high water mark for the city. Another unnamed occupier signed up for a full floor in One Exchange Square during October for around HK$180 per square foot per month. A new report from Cushman & Wakefield last month was just the latest to find the city’s office rents as the highest in the world.
Multinationals Look Elsewhere as Mainland Firms Move In
In addition to BNP Paribas’ move, Baker and McKenzie is said to be in advanced negotiations to take another 100,000 square feet in Swire’s soon-to-be-completed One Taikoo Place just down the road. And in September, former Bayer division Covestro reportedly leased 20,300 square feet at One Island East and US talent management agency IMG took up 13,000 square feet at Swire’s Dorset House.
US banks have shown a taste for new projects in the Kowloon East, with Citibank having moved its Hong Kong headquarters to the developing business district there last year, and JP Morgan will be moving its Hong Kong team to a new project being developed in the Kowloon East area by Nan Fung and Link REIT.
The high rental rates in Central are being driven by rising demand for space in the city’s most prestigious addresses from mainland corporates, with Chinese titans HNA, Huarong Asset Management, Hillhouse Capital Management and China Development Bank among the many firms from north of the SAR border having leased space in Central this year. In October, China’s Ping An Bank agreed to pay a reported HK$160 ($20.65) per square foot per month for a 12,000 square foot (1,100 square metre) space in Exchange Square.