Rents also fell 0.3% MoM to accelerate space backfilling.
Hong Kong’s Grade A office market recorded a negative net absorption of 139,500 sqft in June, with new lettings down 63% MoM, bucking from the positive net absorption of 196, 400 sqft recorded in May,a report by JLL revealed.
Leasing activity was focused on decentralised areas in Kowloon as tenants continued to seek more cost-effective options to set up offices and expand into. Kowloon East and its surrounding areas continued to draw tenants from Tsim Sha Tsui. Retail firm L.L. Bean reportedly leased 11,800 sqft at NEO in Kwun Tong, whilst DuPont leased 9,500 sqft at China Life Centre in Hung Hom.
On the other hand, new lettings in Central were supported by firms establishing new operations and those seeking additional space to grow.
“Notably, Victoria Offices, an Australian-based coworking operator, has reportedly leased 16,500 sqft at The Centre, to set up their first centre in the city,” Denis Ma, head of research for JLL Hong Kong, said.
Meanwhile, rents in the overall market declined 0.3% MoM in June as an uncertain outlook on leasing demand led to some landlords reducing rents to accelerate the backfilling of space vacated by decentralising tenands. Rents in Central and Wanchai/Causeway Bay dipped 0.3% and 0.7% MoM, respectively.
West Kowloon is expected to be bolstered by new commercial developments in the near future, JLL said.
Also read: Is Kowloon Hong Kong's next Central?
“Following on from the West Kowloon Cultural District Authority’s tender for the Art, Commerce and Exhibitions (ACE) project, the government has listed the commercial site on top of the Express Rail Link terminus in West Kowloon for tender in Q3 2019,” Ma said. “Both sides combined can potentially deliver up to 2.6 million sqft of office space.”
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