Grade A office vacancy rises to 12.9% in 2023

The subdued demand led to a 5.3% decrease in overall rents.
 
Demand for Grade A offices remained subdued, leading to a 5.3% decrease in overall rents by the end of November. 

According to JLL, the vacancy rate of Grade A offices rose to 12.9% by the end of 2023, whilst Central’s vacancy rate increased to 9.9%. 

JLL, however, noted that the total surrendered office space in five major submarkets improved in 2023, dropping  27.2% YoY to 552,000 sq ft.
 
Demand for PRC firms also improved, with PRC tenants accounting for 22% of total leasing volume, up from 6% in 2022.

The report also found that 57% of new lettings in 2023 and expansions were for spaces of 10,000 sq ft or smaller, up from 39% in 2019.

"We may see more large space transactions next year. With the completion of new and high-quality projects in 2023 and 2024, tenants in need of multiple floors will have a rare opportunity to choose from a diverse range of premium options. Anchor tenants can enjoy a rental discount compared to small-scale occupiers, along with greater flexibility than we have seen in previous cycles,” Sam Gourlay, Head of Office Leasing Advisory for JLL Hong Kong, said.