Kowloon office leasing transactions drop 25% in September

Small to medium-sized units dominated the leasing market.

According to a Knight Frank report, Kowloon’s office leasing momentum in September was slow, with strong wait-and-see sentiment. There was occasional movement related to project-based leasing and cost reduction. In September, the volume of new leasing transactions saw a MoM decrease of 25%. 

“With limited new demand, the average monthly rent dropped slightly to HK$22.5 per sq ft. Most of the leasing transactions were dominated by small to medium-sized units of under 3,000 sq ft and rents of HK$20 per sq ft or less. Leasing activity from electronics companies was more active during the month,” the report said.

Here’s more from Knight Frank:

A few relocation cases, especially in Kowloon East, dominated the leasing market in September. For instance, MTR expanded from Telford Plaza to Hang Seng Tower in Kowloon Bay, taking a 26,000 sq ft space; and AECOM expanded to two floors in Grand Central Plaza Tower 1 with 17,834 sq ft of space. However, these project-based expansion cases are short-term, as they expanded mainly because they were awarded individual government projects. These companies will likely terminate their leases after project completion. 

ICBC’s move from Kwun Tong will significantly increase office vacancy. We expect major developers in Kowloon East to adjust their rents to attract new tenants. Overall rent levels in the area are expected to fall until the end of the year, when more relocations are likely. Overall, we expect a rental drop of 1–3% over 2024.