Demand has even jumped by 4.1m sq ft.
Large multinational companies may be the traditional occupiers of Hong Kong's Grade A offices, but they have increasingly opted for less costly office space in recent years, according to new research report from CBRE, The Evolution of the Hong Kong Grade A Office Market – a Telescopic Analysis.
However, this has not reduced demand for Grade A office space overall, with total occupied space reaching 71.6 million sq. ft. during the three-year period of the study (March 2013-March 2016) – an increase of 4.1 million sq. ft..
Rents for Grade A offices rose by an average of 10% over the same period. By submarket, demand for space was particularly strong in the Central CBD.
The vacancy rate in Greater Central (Core Central, Admiralty and Sheung Wan) fell from 4.7% to 1.4% during the study period, while rents increased by 16%.
Similar vacancy trends were also observed in other submarkets, although rents elsewhere have risen by less than in Central.
“While demand levels in the Hong Kong Grade A office market remained healthy during the study period, this rosy picture was not painted equally by all industry sectors, with some growing rapidly in terms of space requirement while others reduced their footprints,” said Marcos Chan, Head of Research, CBRE Hong Kong, Southern China and Taiwan.
“We have observed a very uneven pattern of expansion between companies headquartered in different markets. On the one hand, many multinational companies are managing costs and choosing more affordable solutions in decentralized offices. On the other, we saw an increase in demand for premium Grade A offices from mainland Chinese firms, particularly in the CBD,” said Rhodri James, Executive Director, Advisory and Transaction Services – Office, CBRE Hong Kong.
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