Hong Kong office market bifurcation deepens as prime assets outperform

Over half of new leases in 2025 were signed in Central.

Hong Kong’s Grade-A office market is showing increasingly divergent performance between submarkets and asset classes, with Central continuing to outperform amid a sustained flight to quality, according to Knight Frank.

In its latest outlook, Knight Frank noted that demand for premium Grade-A office space in Central is rising, supported by strong leasing activity and tenant preference for modern, well-located buildings. Over 50% of new leases in 2025 were signed in Central, a trend expected to continue and contribute to further vacancy tightening in the core CBD.

This tightening is also expected to generate positive spillover effects into nearby submarkets such as Sheung Wan, Admiralty and Wan Chai, particularly for assets with harbour views and higher-quality specifications.

However, Knight Frank warned that oversupply in several non-core districts is likely to weigh on rental performance in 2026, with non-premium offices outside Central expected to see further rental declines.

The report highlighted a growing bifurcation in the market, with prime Grade-A CBD buildings benefiting from “flight-to-quality” demand driven by modern specifications, strong amenity offerings and superior locations. In contrast, older or non-core assets are facing increasing pressure due to outdated layouts, weaker efficiency and reduced tenant appeal.

Knight Frank expects this two-speed market dynamic to widen further in 2026, reinforcing the divide between high-performing core assets and underperforming secondary stock as occupiers continue to prioritise quality and efficiency in their leasing decisions.