Hong Kong’s shifting office trends embrace flexibility and collaboration
As the office leasing dynamics evolve in Hong Kong, ESG considerations also influence tenant choices, say Colliers experts.
The Hong Kong office leasing landscape is witnessing a transformation as occupiers prioritise flexible spaces that integrate remote work practices.
Senior Associate Director Alex Siu and Associate Director Eugene Yip, both of Colliers Hong Kong, told Hong Kong Business that landlords are adapting to evolving trends to stay competitive in the city’s supply-heavy market.
The changes are a result of evolving tenant preferences amidst hybrid work arrangements that were ushered in by the pandemic.
Since the reopening of borders, the Hong Kong office market has exhibited cautious optimism. Tenant uptake has been restrained, with businesses closely monitoring market dynamics and business outlook.
This uncertainty has propelled a demand for flexible leasing terms, with serviced offices experiencing a surge in popularity.
“Lower overhead capex and the ability to adjust to varying headcounts and space needs make serviced offices an attractive proposition,” Yip said. Location-wise, tenants largely favor staying put, aiming for lease renewals to secure possible discounts in the current market climate.
The Colliers executives noted that decentralisation remains a focal point, as businesses explore cost-saving opportunities. Areas like Sham Wan, Wanchai, and Causeway Bay are emerging as hotspots for relocations, they said.
In particular, the island east is gaining attention due to its significant cost advantages.
Additionally, some tenants opt to stay within their current district whilst upgrading to higher quality spaces, leveraging reduced rents to access enhanced amenities, newer buildings, and improved client-facing environments.
The post-pandemic era has catalysed a shift toward hybrid work models. Many companies adopt partial work-from-home arrangements, prompting the creation of multifunctional office spaces that facilitate team collaboration.
“Office designs are adapting to accommodate hybrid work setups, catering to teammates who occasionally gather to work together,” Yip said. The emphasis on collaboration is redefining office spaces and reshaping tenant expectations.
Meanwhile, sustainability and eco-friendliness are gaining traction in office leasing decisions.
Multinational corporations prioritise Environmental, Social, and Governance (ESG) features as a reflection of global trends.
Whilst local companies focus primarily on cost considerations, ESG-certified buildings attract occupiers aiming to align with sustainable practices.
“ESG certificates offer concrete proof of commitment, and we’re seeing older buildings refurbished to meet these requirements,” said Siu. New developments inherently possess an advantage in implementing eco-friendly measures due to their design flexibility.
In the past year, there has been a divergence in occupier behavior. Some companies leverage rental reductions to upgrade to higher-quality spaces, often coupled with flexible workplace arrangements.
Others prioritise cost management, leading to lease renewals or downsizing efforts. “Tenant considerations include renovation costs, employee retention concerns, and overall cost minimisation,” Siu said.
Such factors impact the decision to relocate or stay.
As a piece of advice, property owners are encouraged to remain proactive and flexible. The property experts said reacting promptly to market dynamics and offering competitive rates can yield positive outcomes.
“Landlords who embrace flexibility tend to secure key tenants, maintain vacancy rates, and bolster their rental performance,” Yip said, noting that a swift response to changing tenant preferences is pivotal for success.
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