Grade A office leasing demand to rise as tenants seek to upgrade spaces: JLL
More new spaces will push vacancy rates up, but also attract tenants to upgrade.
Market demand for Hong Kong’s Grade A office is expected to continue through the path of improvement as new office spaces are completed, according to JLL’s latest property market report.
An estimated 3.2 million square feet of new Grade A office space are scheduled for completion in 2023, said Alex Barnes, managing director at JLL Hong Kong. Whilst this will drive vacancy rates to rise, the new completions are also expected to attract tenants to relocate and upgrade their offices, Barnes said.
For example, Doo Group leased an entire floor– with a gross floor area of 12,600 square feet– at the Millennity in Kwun Tong to upgrade and consolidate its offices within the same district, JLL noted.
"Tenants are viewing it as an opportune time to upgrade on the back of more choices, variety of floor plate sizes, and the latest green and technological facilities,” Barnes said.
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Overall, the office market recorded a negative net absorption of 245,100 sqft in April, which JLL attributed to the return of some sizable spaces to the market during the month.
Overall vacancy rate also rose to 12.3% at the end of April, although Central's vacancy rate remained flat.
Rent prices dropped 0.3% in April compared to March. Rentals in Central and Kowloon East dropped by 0.5%, whilst Tsim Sha Tsui’s rent rose by 0.3%.