The wave of new supply relieved the pressured market.
The completion of new office projects gave the necessary reprieve to Hong Kong’s tight office market after vacancy rates let up from 3.9% in July to 4.2% in August, according to a report by JLL.
Vacancy rates in Hong Kong East rose from 1.4% in July to 1.6% in August which was also observed in Kowloon East where headline figures let up from 9.6% to 9.9%.
Rising vacancy rates could be attributed to the completion of South Island Place in Wong Chuk Hang which saw the addition of around 307,200 sq. ft. of Grade A office space being added to the market.
On the other hand, vacancy rates in Wanchai remained unchanged at 1.6% whilst inching up from 1.5% to 1.4% in Tsim Sha Tsui. Central’s office market also remained tight in August as vacancy rates stayed flat at 1.5%. This comes as finance firms remained undaunted in their leasing activity with crypto trading platform BitMEX reportedly leasing a whole floor in Cheung Kong Center for a record rents of $225 psf monthly.
On the rental front, leasing costs extended their steep uptrend after Grade A office inched up by 0.7% MoM in August, with Wanchai/Causeway Bay leading the pack after leasing costs rose 1.0% followed by Central at 0.9%.
“Whilst Grade A office rents moved higher in most submarkets during the month, the wave of new office supply coupled with elevated levels of vacancy in Kowloon East are expected to dampen growth in the district in the months to come. Nonetheless, the rise in supply in Kowloon East should will likely provide an opportunity for tenants seeking to decentralise,” Alex Barnes, Head of Markets at JLL, said in a statement.
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