Hong Kong East and Kowloon outpaced Central as they led the shift towards decentralisation.
Net-take up in the office market hit 209,900 square feet in January with Hong Kong East and Kowloon East outpacing Central in terms of leasing activity as tenants increasingly moved to decentralise and consolidate their offices amidst high property prices in traditional CBDs, according to JLL’s Property Market Monitor.
Overall office rents inched up 0.5% whilst vacancy hit 5.1% in January.
In a breakdown, rents for Hong Kong East grew a further 0.8% MoM thanks to strong demand for premium Grade A1 offices. Correspondingly, vacancy tightened to 4.3%. Kowloon East, on the other hand, still has the largest vacancy rate at 12.2% but the projected expansion of co-working spaces in the area may tighten the vacancy rate within the coming months.
As Hong Kong East and Kowloon East snapped up the office pie this January, new lettings in traditional CBD Central fell 14% MoM and hit a modest 33,000 sq ft as other office sub-districts are offering more competitive commerical rents. However, it still boasts the tightest vacancy at 1.6% as Mainland companies still prefer the CBD with a sea view.
“The widening gap between rents in Central and emerging core business districts will add momentum to decentralisation. With the support of the outbound growth of mainland Chinese companies, we expect Hong Kong’s Grade A office market rentals to continue to trend higher, rising by up to 5% in 2018," said JLL Head of Markets Alex Barnes.
Photo from WiNG - Own work, CC BY 3.0
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