Swire Properties is said to have scored a major victory in the battle to establish a new business hub in Hong Kong as Facebook has reportedly signed up for multiple floors in the developer’s One Taikoo Place project.
The photo-sharing, poke-sending social network is said to have pre-leased around 100,000 square feet (9,300 square metres) in the one million square foot office tower, which is currently under construction in the Quarry Bay area, according to a report in the Hong Kong Economic Times which cited industry sources.
The leasing win comes as Swire is also said to be in advanced negotiations with US law firm Baker McKenzie to take up a similar amount of space in the 48-storey super-prime building, which is preparing to open for occupancy in mid-2018. Along with its twin, Two Taikoo Place, which is scheduled for completion in 2021, the new office project is part of a HK$15 billion Swire investment in redeveloping the Taikoo Place area into a primary commercial hub.
The two office towers will add some two million square feet of high grade office space to eastern Hong Kong island, as businesses traditionally based in Central flinch at the district’s world-leading office rents.
Baker Mac May Join Eastward Migration
Facebook’s commitment translates into four or five floors in One Taikoo Place, reportedly in the building’s lower zone. Floorplates in the tower, which is currently being built by Gammon Construction, average around 21,000 square feet by leasable area. The Silicon Valley heavyweight is already established in the Quarry Bay area, where it leased a whole floor in Swire’s One Island East in Taikoo Place in 2014.
In addition to winning over Facebook, Baker and McKenzie is said to be in advanced negotiations to take another 100,000 square feet in One Taikoo Place. The US law firm is currently based in Hutchison House in Central, but is reportedly shopping for new locations as it nears the end of its current lease term.
Swire has previously indicated that it aims to pre-lease one third of the space in One Taikoo Place by the end of 2017, and commitments from Facebook and Baker Mac would take the blue chip developer most of the way to that goal. Earlier reports indicated that space in One Taikoo Place, which is aiming to achieve the LEED Platinum certification for sustainable buildings, would lease for between HK$55 to HK$65 per square foot per month.
Mainland Demand Pushes Multinationals Out of Central
With rental rates for grade A office space in Central averaging HK$125 per square foot per month at the end of June, according to the latest Mingtiandi Hong Kong office index, UK law firm Freshfields already fled the district for Swire’s One Island East earlier this year. Like One Taikoo Place, One Island East is located in the Quarry Bay area, just over 7 kilometres (4.4 miles) from the city’s traditional business hub in Central district.
The rising rents in Central come as mainland corporates continue to take up more prime space in Hong Kong’s priciest business addresses.
China’s Ping An Bank recently 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 the Exchange Square complex in Central, where HNA Group already occupies over 93,000 square feet of space.
During the second quarter of this year, mainland corporates are said to have accounted for 85 percent of the major new leases in Central, according to research published by global property consultancies.
The high prices in Central have sent many multinationals looking for alternative locations in Hong Kong, with US financial giant Citibank having moved into a new 301,500 square foot building in Kowloon’s Kwun Tong area last year.
Two other western firms signed up for space in the Quarry Bay area during September, with former Bayer division Covestro reportedly leasing 20,300 square feet at One Island East and US talent management agency IMG taking up 13,000 square feet at Swire’s Dorset House. Both tenants are said to have relocated from offices in the Wanchai/Causeway Bay, according to a statement from JLL.