This is the prevailing trend in Kowloon’s office property market

Firms are after building upgrades and space optimisation.

If the recent tenant movements in Kowloon, Hong Kong are anything to go by, the major trend in the area appears to be building upgrades in tandem with space optimisation. 

According to Knight Frank, Ocean Network Express, a global container shipping company originally located in Two Harbour Square, with 60,000 sq ft of office space, moved to Gateway Tower with a downsized office of 23,000 sq ft for the location upgrade. The sourcing division of a U.S. fashion brand also opted for a premium office quality upgrade, relocating its 46,000 sq-ft office in a non-standard office building, Hong Kong Spinners Industrial Building, to Hang Seng Tower, taking 26,000 sq ft.

Here’s more from Knight Frank:

Apart from the flight-to-quality trend, leasing momentum in Kowloon was driven by intra-market musical chair activity and largely supported by renewal transactions. A handful of significant renewals were recorded during the month. A US-based construction company renewed its 60,000 sq-ft lease in Goldin Financial Global Centre; and a Chinese conglomerate confirmed its renewal of about 40,000 sq ft in Manhattan Place. 

Looking ahead, we expect leasing demand to continue to shrink amid the market uncertainty. Before new demand is created by the long-awaited border reopening, we expect tenants to remain cautious and rents to stay stable in the coming three to six months.