Tenants moving out of Central also contributed to the decline.
Central’s Grade A office market recorded a 14,500 sqft negative net absorption for the sixth month in a row, due to sluggish demand from mainland Chinese companies and ongoing tenant decentralisation, JLL’s latest Property Market Monitor revealed.
According to Alex Barnes, head of markets at JLL, new lettings in Central were underpinned by expansion requirements from banking/finance and legal firms. Notably, law firm Goodwin Procter leased 13,100 sqft at Edinburgh Tower to accommodate expansion.
“Although demand for office space in Central has softened, rents still increased a further 0.2% to $103 psf last month against a vacancy rate of just 2.2%,” Barnes noted.
Overall, the occupier market was still able to grow by about 12,200 sqft behind a 71% MoM increase in new lettings largely due to Hong Kong East as tenants seeking more cost effective office options in Hong Kong East.
In one of the most notable deals recorded, the Securities and Futures Commission (SFC) leased 182,700 sqft at One Island East in Quarry Bay, relocating and expanding their offices out of Central.
Denis Ma, head of research at JLL, noted that with availability in the city’s traditional core-area office markets remaining tight, office rents are expected to rise between 0 to 5% in 2019.
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