Central office rents up 0.2% in August

It was led by a 0.5% m-o-m growth in Grade A2 office rents.

Net take-up of Grade A office amounted to 23,400 sq ft in August, a m-o-m increase of 0.3%, according to research in JLL’s latest Monthly Market Monitor released today.

Leasing demand primarily arose from growing tenant interest in office locations outside of Central, such as Kowloon East and Hong Kong East.

In Kowloon East, the most significant transaction was WeWork pre-leasing 58,300 sq ft at Mapletree Bay Point in Kowloon Bay. Alex Barnes, Head of Hong Kong Markets at JLL, said: “There is growing demand in the city for shared office space, similar to what WeWork offers. More and more companies are finding that co-working space gives their corporate real estate portfolios greater flexibility. I feel confident that the sector will continue to grow and seek more leasing opportunities.”

In Hong Kong East, Prada stood out by pre-leasing 18,600 sq ft at One Taikoo Place in Quarry Bay, which is schedule to complete in 2019. Rents in Hong Kong East grew by 0.4% m-o-m on the back of a 1.0% m-o-m growth in rents in Grade A1 offices, where vacancy remained tight at just 0.8%.

In Central, overall office rents edged up by 0.2% m-o-m, led by a 0.5% m-o-m growth in Grade A2 office rents. PRC demand slowed and accounted for just 45% of the floor area of the total of new lettings in Central. “The recent slowdown in demand from Mainland Chinese firms has largely been attributed to the tight vacancy situation in the Grade A1 office market as well as many firms adopting a wait-and-see attitude towards their real estate requirements ahead of the National Congress in October.” explained Denis Ma, Head of Research at JLL in Hong Kong.

Still, the decrease in PRC demand was partially offset by an uptick in demand from US law firms, which helped push the volume of new lettings up 57% m-o-m. One relocating law firm leased 7,000 sq ft at Jardine House, while two new set-ups leased about 14,000 sq ft at Edinburgh Tower.