(22 June 2020, Hong Kong) Central’s Grade A office rents fell 2.7% to HKD 102.4 per sq ft in May as the vacancy rate reached 5% for the first time since the Global Financial Crisis in 2008, according to JLL’s latest Property Market Monitor, released today.
Overall office rents dropped by 2.2% m-o-m in May. The sharpest decline was recorded in Tsim Sha Tsui and Kowloon East, where vacancies were the highest among the major office submarkets. Figures from JLL’s research show, the vacancy rates in Tsim Sha Tsui and Kowloon East grew to 6.5% and 13.7% respectively last month.
Alex Barnes, Head of Markets at JLL in Hong Kong, said: “Rising vacancy continued to exert pressure on rents, but the decline was milder than in previous months. Central’s Grade A office rents dropped by 2.7% m-o-m in May after it fell 4.5% m-o-m in April,”
“As uncertainties persisted and landlords became more willing to lower their rental expectations, tenants tended to renew their leases in order to save on capital expenditure,” he added.
Nelson Wong, Head of Research at JLL in Greater China, said: “In the overall Grade A office market, it recorded a negative net take-up of 196,500 sq ft in May due to the slowing leasing demand. In Central, the market recorded a negative absorption 115,600 sq ft, the highest monthly net withdrawal in more than one year.”
New lettings were mostly concentrated in premises outside of Central. Two finance firms have leased a total of 18,900 sq ft at Lee Garden Three in Causeway Bay as they sought for more cost effective options outside the traditional business districts.
