Office demand to remain subdued in 2023: JLL

Given the situation, rents will likely fall by 3%-5% this year.

Grade-A office demand in Hong Kong will remain subdued in 2023, according to JLL, adding that this will put downward pressure on rents.

The weak demand has pushed the vacancy rate in Hong Kong Island up. Central’s vacancy rate also remains at a high level.

The high vacancy rate coupled with the 1.83 million sq ft of new office space entered into the office market, primarily in Central and Wan Chai, will likewise drag rents down.

“ In the short term, some landlords may reduce rents to attract tenants, but the reduction will likely be less than during the pandemic,” JLL said.

Given the situation, JLL expects rents To fall by 3%-5% in 2023.

JLL, however, said Kowloon will be a bright spot for Hong Kong’s office market.

Next year, JLL expects the oversupply of office space in the market to “cease.”

“The new office supply drops to only 0.67 million sq. ft. [next year], representing less than 40% of the 10-year average annual absorption amount,” JLL said.

 “This shift in supply brings the market's attention to focus less on future stocks and more on the supply completing this and last year,” JLL added.