F&B operators driving up rents in non-core retail areas

About half of 65 deals done by Savills were situated in non-core areas.

The Food and Beverage sector is driving leasing activities in non-core retail areas in Hong Kong, Savills has reported.

Rents in core retail areas in Central, Causeway Bay, Tsimshatsui, and Mongkok, declined 4-6.2% in the first quarter, as operators lease spaces in areas outside prime street shops.

“Operators focused on local consumption saw a chance to lease shop spaces which were previously unavailable to them,” Savills said, citing for one American Eagle’s move to lease about 7,400 sq ft at LHT Tower in Central as their flagship store.

The F&B sector has been a steady demand driver since 2017 even as the economy have over the years been affected by the China-US trade war, social unrest and COVID-19 pandemic.

Total F&B licensing amounted to 25,329 by end-2020, reflecting a 4.6% year-on-year growth.

"A tenant favourable market has drawn F&B operators setting up their first shop or expanding their presence in neighbourhood areas,” Retail Leasing of Savills Senior Director Barrie Chan said.

“We expect F&B operators to remain on the lookout for leasing opportunities over the near-term against an increased possibility of further easing of existing social distancing measures."

F&B operators were taking advantage of low rental market to expand in non-core retail areas

Savills noted about half of its 65 deals since 2020 was situated in three areas -- Tseung Kwan O, Tsuen Wan and Tung Chung. The said deals were dominated by international and Asian cuisine operators.