Grade A office market net absorption steady, high street leasing up in Q3: report

The residential market stays stagnant despite the Fed rate cut.

In Q3, the overall Grade A office net absorption was 324,100 sq ft, bringing total net absorption for the first three quarters to approximately 980,000 sq ft, Cushman & Wakefield reported.

The total new leasing area for the period reached 833,600 sq ft, with the banking and finance sector contributing 38% of the total leased area. 

Meanwhile, the overall availability rate fell 19.3% due to the lack of new market supply during the period. 

Cushman & Wakefield expects the rental correction to continue through the remainder of the year, with an overall Grade A office rent drop forecasted between 6% and 8% for the full year 2024.

In the retail leasing market, high street activity gained momentum in Q3, with local and international brands picking up on attractive rent offerings at prime locations.

Overall high street vacancy rate also continued to fall to 8%, the lowest since the pandemic.

On the flip side, total retail sales dropped 7.7% year-on-year (YoY) from January to August, impacted by changing consumption patterns of tourists and locals, along with the strong Hong Kong dollar reducing shoppers' purchasing power compared to other destinations.

Cushman & Wakefield also reported that whilst the US Federal Reserve's rate cut in September marked the end of the two-year interest rate hike cycle, some potential buyers in the residential market remain cautious, waiting to see the pace and continuity of further rate reductions in the coming months.

Following the Fed rate cut, there were only 2,850 transactions recorded in September, suggesting an incoming “rapid expansion of activity”.

“We expect the primary home sales market to be most active, with developers keen to launch new projects,” Cushman & Wakefield said.