International accounting firm KPMG is said to have signed up for 150,000 square feet (14,000 square metres) of space at South Island Place, an upcoming office project under development in Hong Kong’s Wong Chuk Hang area.
The lease, which would be equivalent to as much as 10 floors of the 28-storey project, was reported in the Hong Kong Economic Times, and would be an early win for partners Swire Properties and Hong Kong-based builder China Motor Bus Company, who topped out the joint venture structure in April of this year. Contacted by Mingtiandi regarding the reported agreement, a Swire Properties representative declined to comment.
Should the lease be finalised, it would rank as the largest floor space commitment in Hong Kong so far this year, and serve as recognition of both the increasing connectivity of Hong Kong’s south island area with the city’s Central business district, and the growing aversion among multinationals for the rental rates in the city’s core commercial hubs.
KPMG Could Cut Rent Bill by 50%
One of the major factors driving interest in locations such as Wong Chuk Hang, which has emerged as an alternative office destination since the opening of the MTR South Island Line in late 2016 put it just 15 minutes from Admiralty, has been the lower price of office rentals.
Monthly rents for grade A office space in Central averaged HK$137 per square foot per month in the first quarter of this year, making it fifty percent more expensive than London’s toney West End, according to Cushman & Wakefield research.
Grade A premises in Wong Chuk Hang currently average around HK$25-34 per square foot, according to JLL, and Swire Properties informed Mingtiandi earlier this year when South Island Place began leasing, that the property’s rents were comparable to other prime projects in the area. Wheelock’s One Island South, which is just ten minutes walk from Swire’s new project is charging HK$25-29 per square foot per month.
KPMG has been parking its staff in on the 20th to 25th floors of Causeway Bay’s Hysan Place since 2012, where it has been paying around HK$50-60 per square foot per month for its approximately 80,000 square feet of space after making a pre-opening commitment to developer Hysan in 2011. The tax and audit titan also has offices in Hongkong Land’s Prince’s building in Central.
Now with Hysan Place effective rentals averaging HK$82.5 per square foot of net floor area as of the end of June, according to Cushman & Wakefield, and the financial consultancy’s footprint growing, KPMG may be heading south on Hong Kong island.
Leasing 40% of South Island Place in One Deal
Should the KPMG lease be confirmed it would help instantly take just under 40 percent of South Island Place’s 382,500 square feet off the market.
Speaking of the project’s appeal in a statement earlier this year, JLL broker Gigi Lo noted, “South Island Place in particular has attracted overwhelming interest given the size of its floor plates and the reputation of the developer. With more Grade A office space available, we expect leasing to continue to pick up, especially among occupiers looking to relocate from other older Grade A towers elsewhere on Hong Kong Island.”
Floors in South Island Place average 15,000 to 20,000 square feet per floor and Swire, which is best known for its Pacific Place and Taikoo Place complexes in Hong Kong, expects to complete the project in late 2018.