Two-Floor Pickup at Swire’s Pacific Place Led Hong Kong Office Leasing in February

Tenants in Hong Kong’s Grade A office market took up 7,200 square feet (669 square metres) more than they gave back in February, a marginal gain aided by a new letting at Swire Properties’ Pacific Place complex in Admiralty, according to JLL.

Local wealth manager KGI leased two floors totalling 39,200 square feet at Swire’s One Pacific Place for a business expansion, the consultancy said in its Market Dynamics report, as financial occupiers continue to focus on prime locations.

The city’s office leasing market has been more active since early this year, driven by expansion demand from the insurance, private wealth and education sectors, said Alex Barnes, managing director and head of office leasing advisory at JLL Hong Kong.

“Another key driver is the corrections in rents for quality office buildings have reached attractive levels, making it more affordable for occupiers to seize the opportunity to upgrade office spaces,” Barnes said.

Rent Slide Continues

JLL didn’t disclose the monthly rent at One Pacific Place agreed by KGI, whose head office is on the 41st floor of the 1992-vintage Central Plaza tower in Wan Chai. Latest rentals at One Pacific Place ranged from HK$85 to HK$95 ($10.93 to $12.22) per square foot in the fourth quarter of 2024, according to a Swire operating statement.

In another notable February letting, Ralph Lauren Sourcing Co Ltd took up two floors with a total gross floor area of 66,000 square feet at 83 King Lam Street in Kowloon’s Cheung Sha Wan area, JLL said. The fashion label procurer upgraded from an industrial building in the same district.

Office rents continued to decline citywide, dropping 0.5 percent from January to an average of HK$46.90, said Cathie Chung, senior director of research at JLL Hong Kong.

“Rents in Central and Wan Chai/Causeway Bay both experienced decreases, falling by 0.4 percent and 0.2 percent, respectively,” Chung said. “Meanwhile, Hong Kong East recorded the largest rental drop among all submarkets, with a decrease of 1.3 percent. Kowloon East also saw a rental drop of 0.5 percent.”

Central Vacancy Up

The overall vacancy rate held steady at 13.3 percent at the end of February, according to JLL. Among submarkets, Central vacancy rose 0.2 points from January to 11.5 percent while the rate in Wan Chai/Causeway Bay continued to improve, falling 0.2 points to 9.6 percent.

Hong Kong East’s struggles persisted as the submarket’s vacancy rate rose 0.2 points to 13.2 percent. Rates were unchanged at 8.9 percent in Tsim Sha Tsui and 18.8 percent in Kowloon East.

In the capital market, Gale Well Group reportedly sold the 26th floor of The Sun’s Group Centre, a space serving as the property investor’s headquarters, for HK$77.6 million ($10 million). Equating to HK$10,500 per square foot of lettable floor area, the deal marked a historical-low unit price going back more than a decade at the building in Wan Chai, JLL said.