According to the latest Property Market Monitor research from global real estate consultant JLL, Hong Kong's overall Grade A office rentals contracted significantly in September 2020.
Rents in Hong Kong continued to fall across all major office submarkets, with the overall market down 1.3 percent m-o-m in September after falling 1.7 percent in August. Compared to an average rental decline of over 2% per month in the first half, the rental decline has slowed. COVID-19 appeared to be more contained, which contributed to the improvement. land
Rental pressure was more evident in Hong Kong Island's traditional core office submarkets, where rents fell more than 1.5 percent month over month as demand remained sluggish and vacancy rates rose.
As a result of decentralizing tenants, a considerable quantity of space in Central was returned to the market, resulting in net absorption of -243,500 square feet. The vacancy rate in Central increased to 6.8% following the return to the lease market of office space previously used by the Securities and Futures Commission when the organization relocated to Hong Kong East.
A few flexible space operators took space in Causeway Bay to open new centers, resulting in low demand. Compass Offices, for example, has rented an office space at Lee Garden Two with a lettable floor size of 15,700 square feet, while Sky Business Centre has leased an office space at Times Square with a gross floor area of 17,000 square feet. Sullivan and Cromwell leased a 14,000-square-foot office in Alexandra House in Central to relocate from another Grade A building in the region.
According to Paul Yien, Senior Director of Markets at JLL in Hong Kong, "The overall leasing demand in the office market is still low, since many businesses are taking a wait-and-see approach. However, we've seen a number of organizations lease additional office space in order to combine their offices in various locations and upgrade when landlords are prepared to offer more flexible leasing terms."
Nelson Wong, Head of Research at JLL in Greater China, added, "In the property investment market, "In September, office property sales remained slow, with only a few strata-titled office floors worth more than HKD 20 million changing hands. Last month, retail investment activity was likewise sluggish, especially in high-traffic regions. Because the retail business is primarily sustained by local demand, investor interest has remained focused on assets in non-shopping areas. This year, we expect the tendency to continue."