Hong Kong Grade A office vacancy hits 14.5% in Q3

Older Grade A buildings are experiencing subdued leasing activity.

In a report, Knight Frank data revealed that the quarterly net take-up in Hong Kong’s Grade A office market hit 311,437 sq ft in Q3 2025, whilst vacancy reached 14.5%.

“Although the occupier demand from the finance sector for premium Grade-A offices in Central continues, other older Grade-A options and some new developments continue to see a lack in leasing activity,” the report said.

Here’s more from Knight Frank:

Hong Kong Island’s leasing demand is primarily driven by financial institutions—seeking to upgrade or expand into premium Grade-A office spaces in Central. This surge in activity has intensified competition among traditional Grade-A buildings, which are now focusing on tenant retention and actively competing with new developments to capture limited relocation demand.

Consequently, pre-leasing progress in some new projects has slowed. Nonetheless, Premium Central recorded a year to date (YTD) rental decline of just -1.3% in August, outperforming the overall Grade-A market’s -5.2% drop.

Beyond the financial sector, co-working space operators are expanding to meet rising demand from Chinese mainland enterprises and start-ups. PRC legal firms also contribute to leasing momentum. Meanwhile, the technology sector is generating scattered but notable interest in high-quality office buildings located in non-core areas, often requiring substantial floor plates to accommodate expansion needs.

Kowloon

Leasing sentiment in Kowloon mirrors that of Hong Kong Island. In Tsim Sha Tsui, the core district, witnesses an increase in leasing transactions primarily driven by professional services and insurance companies. Offices in Tsim Sha Tsui remain highly sought after by tenants due to their strategic location and accessibility to XRL, making them particularly attractive to businesses serving Mainland Chinese clients. Properties offering renovated interiors and sea views are especially favoured. Conversely, new developments in non-core CBD areas are facing challenges in attracting tenants, primarily due to limited access to MTR stations.

The relocation sentiment in Q3 appears weaker, with expectations leaning towards a higher prevalence of lease renewals as global trade uncertainties persist. Rising renovation costs dampen relocation appetite, as initial capital expenditure becomes an increasingly significant deterrent for tenants. In response, landlords are stepping up efforts to attract new occupiers by offering enhanced incentives—ranging from increased capital expenditure contributions to upgraded fixtures and fit-outs.