Central's Grade A office rents down 1.7% in September

It recorded the sharpest drop of all submarkets during the month.

Central’s Grade A office rents shrank 1.7% MoM to an average of $125 psf in September, the sharpest fall amongst all other business districts and following a 1.9% MoM drop across the submarket in August, according to a report by JLL.

Office rents continued to slide in September, declining by 1.1% MoM. The pullback in rents extended beyond the city’s traditional core office submarkets, with rents in Kowloon East slipping 0.4% MoM.

Landlords reigned in rents as they sought to retain tenants amidst the recent uncertainty in the market.

The fall in rents were also attributed to weakening occupier demand, as leasing volumes declined significantly. New lettings in Central were down 47% MoM in September. Leasing activity was largely dominated by renewals, reflecting the more accommodative stance of landlords.

“The overall leasing market recorded a net withdrawal of 68,800 sqft as new lettings declined by 56% MOM. As in previous months, leasing demand was concentrated in decentralised areas, accounting for close to half of all new lettings in September,” said Alex Barnes, head of markets at JLL.

“Despite rents in Central starting to fall, there remains a significant rental differential compared with decentralised submarkets. Therefore, we still expect the trend of decentralisation to continue for cost conscious tenants,” he added

One of the notable transactions was CLP Hong Kong, reportedly leasing 11,400 sqft at China Life Center in Hunghom, to accommodate expansion requirements.

The industrial market also saw tenants putting expansion plans on hold. Leasing volumes remained limited, although Kwai Chung did see activity with two leases totalling 33,000 sqft at ATL Logistics Centre occuring during the month, said Cathie Chung, senior director of research at JLL.

“Tenants in the warehouse leasing market remain watchful over their expansion plans amidst the prolonged trade war combined with the weakening of the domestic retail sector,” Chung noted.

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