Commercial Real Estate News
Hong Kong Office Market Aided by Flex Space Operators Continued Expansion
Based on JLL's latest Hong Kong Property Market Monitor Report released this week, Hong Kong's Grade A office market recorded net absorption of 157,000 sq ft in September 2022. Flex space operators remained active in the office leasing market and continued to expand their footprints in core business locations.
One of the major transactions in September was IWG leased 25,600 sq ft (GFA) at LKF Tower in Central, whereas The Great Room leased a mid-zone floor (21,300 sq ft, LFA) at Cheung Kong Center for expansion.
The overall vacancy rate rose to 10.5% at the end of September, mainly due to new completions during the month, namely Boton Technology Innovation Centre in Kwun Tong, and AIRSIDE in Kai Tak, in which household appliances manufacturer SEB Asia committed to a mid-zone floor of 37,500 sq ft (GFA). The vacancy rate in core business districts remained stable, while Central's vacancy rate improved from 8.4% to 8.3%.
Alex Barnes, Managing Director at JLL in Hong Kong, said: "In the face of global economic uncertainties and hybrid work becoming more popular, some tenants are turning to spaces that offer more flexibility. This has supported the expansion of flexible offices in the city. With the shift from traditional offices to hybrid work, companies need to rethink the design of their offices to accommodate the changing needs. The role of the office is no longer simply a place to work, but a communal space enabling collaboration, fostering innovation and supporting high-performing teams."
Nelson Wong, Executive Director of Research at JLL, said: "Overall net effective rents dropped further by 1.0% m-o-m in September. Among the major office submarkets, rentals in Central and Wanchai / Causeway Bay dropped by 0.4% and 0.1%, respectively, while rentals in Hong Kong East registered the largest drop of 1.1%."
