Grade A office market sees negative net absorption in March

The education sector emerged as an active player in the office leasing market.

The overall Grade A office leasing market saw a negative net absorption of 63,100 square feet in March, according to JLL's latest Hong Kong Monthly Market Dynamics.

This is primarily due to significant spaces re-entering the market following previous consolidations and relocations.

Vacancy rates of the major business districts were relatively stable last month.

“Overall vacancy rates increased to 13.7%, largely due to the stock adjustments,” said Sam Gourlay, head of office leasing advisory at JLL in Hong Kong Island. “The volume of leasing activities has, however, been strong, with the education sector emerging as another active occupier group alongside that of financial and related sectors.”

Central and Hong Kong East’s vacancies remained steady, whilst the vacancies in Wanchai/Causeway Bay and Tsim Sha Tsui improved, decreasing by 0.1 and 0.6 percentage points, respectively.

In contrast, Kowloon East’s vacancy rate rose to 21.3%, mainly due to the new completion of THE CENDAS in Kowloon Bay.

Notably, Tung Wah College Kwai Hing Campus leased one floor with a total gross floor area of 21,500 sq. ft. at Kowloon Commerce Centre Tower A in Kwai Hing to expand from Tower B.

"Overall Grade A office rents continued to drop last month, with a slight m-o-m decrease of 0.6%,” said Cathie Chung, senior director of research at JLL. “Central and Wanchai/Causeway Bay both experienced modest rental decreases of 0.2% and 0.4%, respectively.”

Chung also added that Hong Kong East experienced the most significant drop, with rents falling by 1.2%, and Kowloon East with a rental decline of 0.2%.