Hong Kong office vacancy rate increased to 12.4% in May

Vacancies in Central rose to 9.2%.

On the back of a general economic recovery and the border re-opening, JLL said in a report that market sentiment in Hong Kong has improved with more leasing enquiries for Grade A office space. Demand for office space is evolving as corporates are increasingly focused on a sustainable and healthy office environment in the post-pandemic era. 

From 2H22 to end-May 2023, data from JLL reveal 52.8% of the sizable new lettings and expansions (>15,000 sq ft, landlord-quoted area) involved commitments in green buildings, more than the previous years. 

Here’s more from JLL:

The overall market recorded a negative net absorption of 165,000 sq ft in May, due to the return of some sizable spaces to the market during the month. While the rental gaps narrowed among submarkets, especially between core submarkets and decentralised areas, tenants are viewing it as an opportunity to upgrade office spaces. 

For example, premium spirits producer Edrington leased part of one floor (16,700 sq ft, LFA) at Two Pacific Place in Admiralty to upgrade and expand its offices from Exchange Tower in Kowloon Bay. 

The overall vacancy rate rose marginally to 12.4% as at end-May. The vacancy rate in Central rose to 9.2%, while Wanchai / Causeway Bay and Hong Kong East's vacancy both dropped 0.2 percentage points. 

Overall net effective rent edged down by 0.3% m-o-m in May. Among the major office submarkets, rentals in Wanchai / Causeway Bay and Hong Kong East dropped by 0.5% and 1.3%, respectively, while Central's rent fell marginally by 0.1%. 

China Ecotourism Group reportedly sold three mid-zone units at Convention Plaza in Wanchai to HK Image Online Limited for around HKD 309.8 million (HKD 34,422 per sq ft, GFA). The units are intended for the buyer's own use.