Kowloon East leasing drives office market growth

The submarket recorded a net absorption of 289,700 sq ft.

Overall net absorption of Grade A offices remained positive in 1Q24 at 260,200 sq ft due to large-scale leasing transactions at new projects in Kowloon East, with the submarket recording a net absorption of 289,700 sq ft, Cushman & Wakefield reported.

The first quarter of 2024 saw the completion of four new office buildings located in Greater Central, Wan Chai/Causeway Bay, Hong Kong South, and Kowloon West, which brought the availability rate up to 19.6%.

In the same period, rental levels remained under pressure despite a slower pace of decline, decreasing 0.6% QoQ and 6.7% YoY.

In terms of new letting activities, 1Q24 recorded a total of 889,000 sq ft of leased space, increasing over 40% YoY.

Over 40% of the new leases were in the Kowloon East submarket, benefiting from lower rents, more new prime buildings, and ESG-certified office spaces.

The public sector accounted for the highest share of newly leased space with 23%, followed by banking and finance (21%), professional services (15%), and insurance (13%) sectors, all recording double-digit shares.