Prime office rents decline as vacancy rate climbs

The city’s office vacancy rate climbed to 13.6%.

Prime office rents in Hong Kong continued their downward slide in Q1 2025, falling to $89.90 per square foot per month, according to the latest Asia-Pacific Office Highlights report by Knight Frank.

The city’s office vacancy rate also climbed to 13.6%, underscoring persistent oversupply and weak demand.

With landlords under pressure, the market remains heavily tilted in favour of tenants. Companies seeking space, particularly in the legal and financial sectors, are leveraging this environment to negotiate better deals, shorter leases, and higher incentives.

Despite the headwinds, select high-profile deals are still being inked. A notable example includes an alternative investment firm securing over 55,000 square feet at The Henderson, a new premium tower that continues to attract finance-related tenants.

Demand from legal firms has also increased, spurred by the growing complexity of financial markets such as cryptocurrency and cross-border regulation.

“While Hong Kong SAR’s office leasing market continues to grapple with an ample pipeline, there were notable take-ups by firms in the legal and financial sectors,” the report noted.

Looking ahead, the report forecasts continued rental declines throughout 2025 as new supply hits the market and companies remain cautious in their real estate decisions.

Economic fundamentals remain steady, with Hong Kong’s GDP projected to grow by 2.3% this year, unemployment at 3%, and inflation at 1.7%.