Grade A office market sees positive net absorption in May

This is the first time since July 2019, JLL said.

The overall Grade A office market in Hong Kong recorded a positive net absorption of 116,300 sq. ft. in May, the first time since July 2019, JLL reported.

JLL said more corporate tenants are upgrading their office space, as rents have corrected to more affordable ranges.

"Occupiers have started to resume real estate decision making in recent months as business confidence builds in Hong Kong,” Alex Barnes, Head of Agency Leasing at JLL in Hong Kong, said.

“We believe that the worst period for the office leasing market has passed and rental fall will moderate in the second half of the year for most core markets."

Leasing activities in retail and warehouse markets have also showed signs of improvement in May. For one, food delivery firm Foodpanda leased two floors with a gross floor area of 39,000 sq. ft. at Times Square in Causeway Bay.

“There were a few notable deals recorded in the retail market in May. Total retail sales continued to record growth in April at 12.1% y-o-y,” Nelson Wong, Head of Research at JLL in Greater China, said.

“Leasing momentum for warehouse continued to pick up alongside a robust external trade environment.”

The gross leasing volume in Central has improved in recent months with the vacancy rate in the submarket retreating to 7.2% from 7.5%, as of end-May.

Rents in the overall market declined by 1.4% m-o-m as landlords lowered their asking rents to get new tenants.

However, it is noteworthy that a handful of buildings with well managed occupancies have recorded rental growth.