These firms recently moved to higher quality offices in Hong Kong

Invesco relocated its headquarters to a 33,000sq ft lease in Jardine House. 

With more small and medium-sized companies looking for office locations in the non-core areas at a low rental level, Knight Frank says the vacancy rate in non-core areas on Hong Kong Island recorded a slight drop in September. 

For example, the vacancy rate in North Point dropped from 12.5% in August to 11.6% in September and in Sheung Wan, it dropped from 8.2% in August to 7.7% in September. 

Here’s more from Knight Frank:

In the recent down market, the trend of flight-to-quality has persisted, as sizable companies continue to seek prime locations at attractive rent levels. U.S. investment manager Invesco relocated its regional headquarters from Champion Tower to Jardine House with a 33,000 sq ft lease. 

Other upgrading cases included accounting firm Baker Tilly, relocating from The Foyer to K11 Atelier King’s Road with a 20,000 sq ft lease, and LVMH Fashion Group, leasing two floors (28,000 sq ft) in Dorset House, relocating from 633 King’s Road. 

New buildings in Central, such as Cheung Kong Center II and The Henderson, which are now open for pre-leasing, have received massive interest from prospective tenants, given their prestigious location and unique building features. However, the abundant future supply in Central will exert pressure on landlords to reduce rents in the short term, so we expect the rental trend to continue its downward adjustment in Q4 2022. 

Kowloon 

As overall business sentiment remained weak, leasing activity continued to slow down in September. Electronics and sourcing companies supported new leasing demand. Most of the deals were small transactions of under 3,000 sq ft, with a rent of HK$22 per sq ft or below. 

Given the elevated economic uncertainty, tenants tended to be more cautious in making leasing decisions. Instead of relocation options, they were inclined to renew their leases at the attractive rent offered by landlords. Therefore, renewal cases dominated the market during the month. 

After the announcement of the ”0+3” quarantine measure, overall business confidence is improving. Although the border is yet to be completely open, it is a start, at least to get some regional business travel going once again. Businesses are keeping their hopes up on the further relaxation of social distancing restrictions and the lifting of all quarantine requirements. Only then shall we see a more significant rebound of economic activity.