Grade A office vacancy up slightly to 9.4% in March

Only Central saw its vacancy rate drop during last month.

The overall vacancy rate for Grade A offices in Hong Kong climbed to 9.4% in March, from 9.3% in the previous month, as districts throughout the city recorded slight increases.

The largest increase was recorded in Wanchai/ Causeway Bay after its vacancy rate rose to 9% from 8.6%; followed by Hong Kong East with 6.3%, from 5.7% in February. Tsim Sha Tsui’s vacancy rate was recorded at 10.5%, up from from 10.2%, whilst Kowloon East’s was unchanged at 14.3%.

Only Central’s Grade A office rents dropped, slipping to 7.3% from 7.5%.

Amongst the notable deals during the month were the rating agency S&P Global move to Three Exchange Square in Central, relocating from International Commerce Centre in West Kowloon.

“Office leasing demand will improve in the coming quarters as occupiers continue to execute real estate decisions that were heavily muted in 2020,” Alex Barnes, Head of Office Leasing Advisory at JLL in Hong Kong, said.

“Workplace upgrades and a flight to quality will continue to be a key theme of this demand.” Gross leasing volume has improved during the quarter as occupiers make real estate decisions.

For one, Manulife has confirmed leasing 144,700 sq. ft. at International Trade Tower to house its headcount growth.

Overall rents declined by 0.5% month-on-month, according to Nelson Wong, Head of Research at JLL in Greater China.

The major office submarket that saw major rental drop was Kowloon East, whilst Central’s rents were relatively stable.

“We expect the downward pressure in the office market to remain this year, but the overall fall in rental will be moderate in the second half of 2021,” Wong said.