Ever-climbing office rents in Hong Kong’s Central district have prompted yet another finance company to change business locales, with private equity firm PAG signing a deal with Swire Properties to lease two floors in Three Pacific Place in Admiralty.
The locally-based private equity firm was reported by Hong Kong Economic Times to be taking a total space of 32,000 square feet (2,972 square metres) in Three Pacific Place, at a monthly rate of HK$120 ($15) per square foot. That price compares with the HK$170 to HK$180 per square foot that prevails in PAG’s current home in the AIA Central building in the city’s traditional business hub.
Three Pacific Place has become an increasingly popular office destination for finance firms as rents in Central continue to spiral upward. Last week, US advisory firm Duff & Phelps was reported to have signed a lease for a 15,000 square foot space there, paying about HK$115 per square foot.
The pair of future neighbors both stand to benefit from lower office rents in their new location as average monthly rates in Central climbed to HK$137 per square foot per month in the third quarter of this year.
Same-Size Space, 25% Savings
PAG’s new office is a two-floor space, with each floor comprising around 16,000 square feet. PAG will be paying a total of HK$3.84 million for its new home in the 33-storey grade A office tower.
Three Pacific Place is about a 20-minute walk from PAG’s old home in AIA Central, a 37-storey skyscraper that serves as the headquarters for insurance company AIA Group. PAG currently occupies the 15th and 32nd floors of the prime office tower, and is said to have been paying nearly HK$5 million per month for the two floors, which amount to 28,000 square feet in total. The migration means PAG will save nearly 25 percent on rental costs.
Duff & Phelps, meanwhile, will have an office space in Three Pacific Place that is around three times the size of its 5,000 square foot current home in The Landmark building on Queen’s Road Central in Central. Duff & Phelps’ cost for the space was about 4 percent lower than what PAG paid, with the advisory firm expected to relocate in the second quarter of next year.
Duff & Phelps and PAG will be neighbors in Three Pacific Place with China Internet giant Tencent, luxury retailer TOD’s, China Overseas Land & Investment, the Bank of New York Mellon Corporation and Philips Electronics.
Moving East, Finding Value
Although PAG and Duff & Phelps found value in their moves to Three Pacific Place, one tenant of the building has already found even cheaper digs, with global property firm JLL announcing in September that it would pack up and move from Three Pacific Place to One Taikoo Place in Quarry Bay next year.
The world’s second-largest property consultancy by revenue currently occupies the sixth floor of Three Pacific Place, at a price of around HK$130 per square foot. Its new 35,000 square foot space in One Taikoo Place — Swire Properties’ newest office tower in eastern Hong Kong Island — will cost JLL a monthly rent of just HK$60 per square foot, a cost savings of 61 percent, or approximately HK$3,325,000 per month