West Kowloon deals drive office leasing momentum in Q1

Two significant leasing transactions involved 350,000sq ft of space.

Leasing momentum in Kowloon’s office market strengthened in Q1 2026, led by major deals in West Kowloon, although broader recovery remains uneven, according to Knight Frank.

Two significant leasing transactions in West Kowloon, involving about 350,000 sq ft of pre-committed space, underpinned activity during the quarter. Additional large leases at IGC and AST highlighted continued expansion demand from corporates seeking high-specification offices with large floor plates and sea views.

Tsim Sha Tsui also saw improving performance, with rising occupancy driven by Mainland Chinese firms and SMEs upgrading locations. Knight Frank noted that office spaces above 10,000 sq ft with sea views in the district are now fully leased.

However, other submarkets lagged. Kowloon East continued to face elevated vacancy levels, with leasing activity largely limited to renewals and consolidation-driven relocations, constraining rental growth.

Knight Frank said demand patterns across Kowloon continue to be shaped by a flight-to-quality trend. As prime space in Central becomes increasingly limited, financial institutions have expanded into decentralised locations, particularly for wealth management centres requiring larger office footprints of 15,000 sq ft or more.

This has supported growing leasing activity in Tsim Sha Tsui and West Kowloon, with banking and insurance firms contributing to the emergence of these areas as alternative financial hubs. However, vacancies created by tenant relocations, alongside new supply in West Kowloon, continue to weigh on overall recovery, with vacancy levels in some developments remaining elevated.

Knight Frank said a gradual, soft landing for the Kowloon office market remains on track, but added that stronger organic demand from sectors such as trading, IT and professional services will be key to accelerating recovery.