Heightened leasing activity in Central was due to new leases by Chinese financial companies.
Leasing momentum for grade A office almost doubled in Q4 as net absorption rose to 603,9000 sq ft from the previous quarter’s 381,500 sq ft, according to CBRE Hong Kong’s market view.
The completion of Lee Garden Three in Causeway Bay and Port 33 in San Po Kong significantly boosted this quarter’s figures as annual net absorption reached a total of 1.2m sq ft which posts the second highest yearly total over the past five years.
Net absorption in Central is back in the black in Q4 after registering 32,900 sq ft with new leases from Chinese financial companies and in-house expansions by banking firms such as Industrial Bank and Tybourne Capital Management, boosting leasing activity in CBD.
In Hong Kong Island, net absorption stood at 335,800 sq ft in Q4. This marks over ten times the figures recorded from the previous quarter at 24,400 sq ft. as the completion of Lee Garden
Three significantly boosted net absorption for the area.
For companies looking to avoid high office rents, Hong Kong East remained the popular location to decentralise with FTI Consulting leasing two entire floors in Oxford House to relocate its office from Sheung Wan.
Moreover, the forthcoming completion of One Taikoo Place is providing more options to offices seeking space in the district.
Net absorption in Kowloon and New Territories combined totaled 268,100 sq ft in Q4 thanks to newly completed construction works built across Kowloon East, Hung Hom and San Po Kong.
Insurance companies continued to expand their presence in Kowloon with AIA leasing an additional floor in The Gateway Tower 2 whilst Manulife snapped 13,500 sq ft in the Manulife Financial Centre Tower B.
CBRE believes that decentralisation and co-working will remain prominent trends across the grade-A office sphere.
Overall rent levels similarly continued on their upward trajectory after posting 1% QoQ increase even as the number of unoccupied properties rose 5.9% at the end of the year.
“Grade A office rents will continue to find strong support across core submarkets in 2017. Low vacancy and sustained financial sector office demand could potentially drive up Central rents by a further 5%. Growth will likely be stronger in buildings near the waterfront, which remain keenly sought after by Chinese firms,” CBRE said in its report.
Photo from iqremix from Canada - Hong Kong Central District, CC BY 2.0
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