Tenants snapped up office spaces sized over 15,000 sqft.
Grade-A office rents rose across the board in June, climbing 1.2% MoM in Hong Kong Island and 0.5% MoM in Kowloon, according to a report by Knight Frank.
Also read: Grade A office rents may drop 5% in 2019
The rental hike in Hong Kong Island was underpinned by a low vacancy rate of only about 1%, leading to an increased demand for office spaces of over 15,000 sqft. However, the report also added that leasing demand for grade-A offices in Central continues to soften and tenants’ affordability for premium grade-A offices in this CBD area was undermined.
“Due to different demand drivers and tenant expectations, rental growth in Central and Quarry Bay is expected to polarise for the rest of 2019,” Knight Frank said.
In Kowloon, grade-A office rents in Kowloon climbed despite softening leasing demand, with the number of transactions falling around 30% MoM. Most of the deals during the month were less than 3,000 sqft and were recorded in Kowloon East.
Some firms in the area have resulted to relocating offices to buildings with lower rents, citing apparel brand Ralph Lauren moving to Hong Kong Spinners Industrial Building, Phase 1 & 2 in Cheung Sha Wan. This is said to help them save around 30% of expenses.
Overall rents in Kowloon are expected to grow 1-3% for the whole year in 2019.
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