Hong Kong East and Wanchai vacancy rates tighten in March amidst relentless tenant decentralisation

Rates narrowed to 2.4% and 2.1% respectively.

Vacancy rates in Hong Kong East tightened considerably from 4.4% in February to 2.4% in March, according to JLL Property Market Monitor, as a growing number of tenants shun traditional CBDs like Central in favour of more affordable office rents in emerging districts.

Also read: Companies exit Central in droves amidst staggering rental costs

Sustained pre-leasing activity at One Taikoo Place in Quarry Bay buoyed rents in HKE to rise 0.6% MoM with multinational accounting firm EY reportedly amongst those joining the decentralisation bandwagon after pre-leasing about 146,300 sq ft in the area.

Vacancy levels also tightened in Wanchai/Causeway Bay from 2.8% in February to 2.1% in March which represents its tightest level in almost two years.

Despite vacancy rates remaining flat at 1.4% amidst a flurry of exits from Central, expansionary activities from companies in the Mainland are keeping rents in the traditional CBD at elevated levels. In fact, Huaxia Bank reportedly leased 14,000 sq ft at Two IFC to accommodate its expansion plans whilst Ping An Securities moved out of its Sheung Wan offices to lease a whole floor sized 14,300 sq ft at CITIC Tower in Admiralty.

“Vacancy rates of Grade A offices are expected to tighten further and push rents higher in 2018, and beyond,” said JLL Head of Markets Alex Barnes.

On the other hand, Kowloon East vacancy levels remained flat at 11.8% whilst Tsimshatsui edged down slightly from 2.5% in February to 2.4% in March.

Photo from WiNG - Own work, CC BY 3.0