Central Vacancy Dips to 12% as Hong Kong Office Rent Skid Continues: JLL

Grade A office vacancy in Hong Kong’s prime Central district eased slightly in July even as unused workspace throughout the city rose to 13.7 percent at the end of the month, according to JLL.

Vacancy in Central edged down 0.1 points to 12 percent, the consultancy said in its Market Monitor report. Hong Kong East saw vacancy fall 0.3 points to 13.1 percent while other key submarkets recorded rises or were flat.

In Kowloon East, where vacancy jumped 0.5 points to 18.8 percent, the Immigration Department moved out of a large space at Sino Land’s Skyline Tower as part of a relocation to the government’s Immigration Tower in Tseung Kwan O. The exit helped drive negative net absorption citywide as tenants gave back 128,900 square feet (11,975 square metres) more than they took up.

With office rents in the global financial hub down 36.5 percent from their 2019 peak, the flight-to-quality trend continues to drive the leasing market, said Alex Barnes, managing director and head of office leasing advisory at JLL in Hong Kong.

“It has reached a level that attracts upgrading demand, as more occupiers currently focus on high-quality space to upgrade their working environment,” Barnes said.

Dun & Bradstreet Relocation

Overall net effective rents fell 0.7 percent from June to HK$49.40 ($6.34) per square foot per month, according to the report prepared by senior director of research Cathie Chung and senior analyst Cici Pang. That reading followed a 0.6 percent drop the previous month.

“Central and Kowloon East saw further rent declines, dropping 0.8 and 0.6 percent, respectively,” Chung said. “Rents also fell in the Wan Chai/Causeway Bay and Hong Kong East submarkets, declining by 0.6 and 1.0 percent, respectively.”

Among new lettings, Swiss lingerie maker Triumph rented 35,750 square feet of gross floor area at PAG’s Manulife Place in Kowloon East for a price reported to be between HK$20 and HK$25 per square foot, while offshore services provider Appleby took up 8,000 square feet of lettable floor area at Swire Properties’ Two Taikoo Place in Quarry Bay for around HK$40 to HK$45 per square foot.

Another tenant on the move was US data analytics firm Dun & Bradstreet, which leased 7,300 square feet of LFA at Swire’s Six Pacific Place in Wan Chai in a relocation from Sun Hung Kai Properties’ BEA Tower at Millennium City in Kowloon East.

New World Discount

In the investment market, Liu Hao Tsing Education Foundation bought three units on a high floor of New World Development’s NCB Innovation Centre in Cheung Sha Wan for a total of HK$86 million, or HK$8,449 per square foot of gross floor area.

The consideration marked a 44 percent discount to the price paid 18 months earlier by watch distributor Cortina Holdings, which purchased three units on a high floor at the same building for HK$63.3 million, or HK$15,067 per square foot of GFA, in January 2023.

New World had relabelled the former 888 Lai Chi Kok Road after selling a set of three high-level floors along with naming rights to the mainland’s Nanyang Commercial Bank for HK$1.2 billion in 2021.