(22 February 2022, Hong Kong) The overall Grade A office leasing market was active and recorded a net absorption of 647,100 sq ft in January before the pandemic took a turn for the worse, according to JLL’s latest Hong Kong Property Market Monitor released today.
The office market recorded positive net absorption for the fourth consecutive month, thanks to improving occupier demand and realisation of pre-commitment in new supply. Tenants also continued to look for quality in their office premises. One of the major transactions involved logistics service provider FedEx, which leased 40,600 sq ft (GFA) at Landmark East in Kwun Tong to consolidate its offices in Kowloon East.
The overall vacancy rate of Grade A offices retreated to 9.4% as of end-January, while the vacancy rate in Central dropped from 8.0% to 7.7%. Kowloon East continued to register the highest vacancy rate among major office submarkets at 12.4%.
Alex Barnes, Head of Agency Leasing at JLL in Hong Kong, said: “The improved leasing demand supported the overall net effective rents to grow a further 0.2% m-o-m in January after it climbed 0.2% in December. Central, Tsimshatsui and Kowloon East also recorded mild rental growth during the month. Despite working arrangements now reverting back to appropriate responses to the current increase in infections in Hong Kong, the effect on the office market will be less than that during the initial impact felt in 2020. We believe office demand will continue its improved trajectory after the pandemic situation stabilises.”
On the industrial sector, Nelson Wong, Head of Research at JLL in Greater China, said: “Industrial leasing and investment markets remained active in January. Fuelled by the rebound of merchandise trade, many logistics players are searching for additional space to capture the gain.”
One of the transactions is Hankyu Hanshin Express which expanded its presence at Asia Logistics Hub SF Centre in Tsing Yi, leasing 58,982 sq ft, while HKAIR Logistics also committed to a whole floor of 28,536 sq ft in Watson Centre in Kwai Chung for in-house expansion.
| Grade A Office Vacancy | ||||||
| Period | Overall | Central | Wanchai / Causeway Bay | Hong Kong East | Tsimshatsui | Kowloon East |
| End-Jan 22 | 9.4% | 7.7% | 9.3% | 7.5% | 10.4% | 12.4% |
| End-Dec 21 | 9.6% | 8.0% | 9.6% | 7.5% | 10.3% | 13.3% |
Source: JLL Research