Office leasing demand remains stable against economic headwinds

Rents were at $48.7 per sq. ft., down 7.9% YoY.

Overall  office leasing demand remained stable in 2024 registering a year-on-year (YoY) net take-up of 0.45 mil square feet (sq. ft.) despite a more cautious and business sentiment, according to Colliers.

Grade A transactions were dominated by small-sized new lettings of below 4,000 sq. ft. net floor area.

The overall Grade A office rents were at $48.7 per sq. ft. ( down 7.9% YoY), recording a continuous 23 quarters of drop since second quarter of 2019, and a 40% decline from the record high $78.7. Moreover, rents in submarkets including Central/Admiralty and Kowloon East, had a significant drop of 9.2% YoY and 9.4% YoY, respectively.

Vacancy continues to set new record highs at 16.8% at year-end, representing 13.9 mil sq. ft. of unoccupied spaces.

In 2025, Colliers anticipates the market to be dominated by renewals as firms remain cautious. Additional demand comes from the Financing, Insurance, Professional, and Business Services sectors will be limited.

“We project an additional 9% decline in overall Grade A rents in 2025, accompanied by a 1.5 percentage point increase in citywide vacancy rates, as new supply exceeds 3.5 million sq. ft.,” said Fiona Ngan, head of occupier services at Colliers Hong Kong.