Grade-A Office rents down 1.8% MoM in October
The downward rental trend will continue for the rest of 2022.
Overall rents in Hong Kong’s Grade-A Office sector fell by 1.4% in October to $71 per square foot compared to the previous month due to the weak market sentiment, according to a report from Knight Frank.
Year-to-date rent declined 6.2%, with the overall rents in Central dipping 1.8% month-on-month (MoM), and in some decentralised markets posting weaker rents such as North Point and Sheung Wan, which were down 2.2% and 2.3% MoM, respectively.
Knight Frank added that flight-to-quality remained the priority for occupiers and leasing demand, with occupiers looking for office quality upgrades at lower rents, particularly in prime locations.
For example, the Canada Pension Plan Investment Board leased two floors in The Henderson covering 26,000 sq ft and will relocate from York House.
Companies from China were active in terms of leasing demand, Knight Frank said noting social media firm ByteDance which leased 15,000 sq ft in The Center for expansion, as it currently occupies 3,000 sq ft in Times Square.
“Overall, we expect demand to remain subdued in the short term, given the lack of positive catalysts for recovery,” it said, adding that the downward rental trend is expected to continue for the rest of the year.
Knight Frank added that the record-high existing vacancies and the upcoming supply in Central will encourage office landlords to lower rental expectations. It will also enable them to offer flexibility to retain and attract more tenants.