Grade A office rents on Hong Kong Island drop 4% in January

And the office vacancy rate remained high at 12.8%.

At the beginning of the year, the activity level in Hong Kong’s office market was high, despite the absence of major transactions thus far. According to a Knight Frank report, the average rent for Grade A office on Hong Kong Island fell to HK$61.1 per sq ft in January, reflecting a MoM decrease of 0.5% and a YoY drop of 4%.

“In Central, the average rent stood at HK$90.0 per sq ft, down 0.6% MoM and 4.3% YoY. The office vacancy rate on Hong Kong Island remained high at 12.8%, a slight decrease of 0.8% in December 2024, with Central at 13.6%,” the report said.

Here’s more from Knight Frank:

In January, the office market was witnessing continued optimism within the finance sector, with hedge funds leading the charge. For instance, a Hong Kong-based investment management firm leased 13,553 sq ft of office space at AIA Central in Central, and a Hong Kong-based hedge fund secured 6,679 sq ft at Nine Queen’s Road Central.

Although there have been no landmark transactions reported in January, we have observed an uptick in leasing inquiries and inspections. Some luxury goods companies were also active with consolidation and upgrading projects, leveraging the market downturn to negotiate favorable lease terms and upgrading their office spaces.

Looking ahead, the vacancy rate for Grade A office spaces is expected to remain high due to the continued influx of new supply. Despite these challenges, there are encouraging signs of improvement in leasing activities, particularly within the finance sector. The trend toward higher-quality office spaces is likely to continue as businesses consolidate.