Commercial Office

The vacancy rate reached 7.1% in Q3 2023.

Rents inched up by 0.1% during the quarter.

Right-sizing is a more attractive option whilst they adopt a wait-and-see approach.

The Central/Admiralty submarket was the main driver of this decline.

The number of transactions declined from 11 in Q2 to just 6 in Q3.

Majority of the relocations are office consolidations.

Analysts expect its present stable trajectory to continue.

And average vacancy rates slightly softened to 3.4%.

The vacancy rate was at 8.2% in Q3, and has been consistently high since the pandemic.

There was a significant level of activity in Kowloon East.

This is expected to drive the vacancy rate to above 29% next year.

It was at a record high of 0.7m sq ft in Q1 2023.

Whilst overall rents on Hong Kong Island are expected to fall by 3-5%.

Grade A office rents have already risen by 1.3% YTD.

This is driven by the upcoming new supply of 64,000sqm.

Rents are expected to bottom out in the near term.