Grade A Office vacancy rose to 9.5% in June: JLL
This compared to 9.4% in May as tenants relocated due to improvement in business sentiment.
Grade A Office vacancy inched up to 9.5% in June from 9.4% the previous month, with net absorption in the overall office market at -97,800 square feet as businesses relocate to upgrade offices, according to Jones Lang LaSalle IP, Inc. (JLL) Hong Kong Property Market Monitor.
Grade A Office vacancy rate in Central Hong Kong rebounded to 7.4% in June from 7.2% in May as tenants also leave after relocation, it said, adding that the majority of leasing activity in the month within the submarket involved smaller spaces.
"Whilst business challenges still exist, a number of tenants have opted to exercise relocation plans amongst general improvement in business sentiment. There is notably more relocation activity in the market as the flight to quality continued with more tenants upgrading their office premises,” Alex Barnes, head of Office Leasing Advisory at JLL in Hong Kong, said.
JLL cited media company New Media Group which leased 36,400 sq. ft. at The Quayside in Kwun Tong to relocate from a nearby industrial building.
It said that overall net effective rents dropped by 0.6% month-on-month “as the elevated vacancy in the sector exerted downward pressure on rents,” noting that Hong Kong East experienced the largest decline among major office submarkets, whilst rents in Kowloon East were “relatively stable.”
In the industrial market, Nelson Wong, head of research at JLL Greater China said “visible” trade recovery continued to advance in May.
“Total aggregate trade registered an increase of 25.3% year-on-year, with imports and exports rising by 26.5% and 24.0%, respectively. Leasing momentum steadily picked up in June given the robust local demand. For example, online shopping platform HKTVmall expanded its presence at Mapletree Logistics Hub Tsing Yi, leasing approximately 144,100 sq. ft.," he said.