Persistent tenant exodus leaves more Hong Kong offices empty in January
A total of 366,200 sq ft of Grade A office space was withdrawn last month.
According to JLL, an overall net withdrawal of 366,200 sq ft was recorded across the Grade A office sector in January as downsizing among occupiers remained prevalent. Notably, Deutsche Bank gave back three floors (103,900 sq ft, GFA) at International Commerce Centre in West Kowloon, while AIA returned various units (64,100 sq ft, GFA) across The Gateway in Tsimshatsui.
The vacancy rate in Central continued to rise, reaching 7.5% as of the end of January. Tenant decentralisation remained an ongoing trend as corporate tenants aimed at cutting rental expenses in the midst of recession and may relocate to more cost-effective office locations.
Despite the rising vacancy exerting downward pressure on rents, rental decline has abated in January with net effective rents in the overall market dipping by 0.6% m-o-m. Wanchai / Causeway Bay experienced the most significant rental contraction during the month, while the other core submarkets, namely Central and Tsimshatsui, were relatively stable.
The slump in the investment market has been ameliorated in recent months. Since the abolition of the Doubled Stamp Duty on non-residential property transactions, there has been an increase in the number of strata-titled transactions. For instance, a floor at 888 Lai Chi Kok Road in Cheung Sha Wan, a Grade A office building developed by New World Development slated for completion in 2022, was sold for around HKD 340 million (HKD 13,940 per sq ft) recently.