Commercial Real Estate News
Despite Covid, Hong Kong's Office Market Enjoys 6 Months of Positive Absorption
According to JLL's latest Hong Kong Property Market Monitor report, the Grade A office market recorded a positive net absorption for the sixth consecutive month in March 2022, despite that the continued Covid social distancing measure, leading to a quiet leasing market.
The office leasing market was muted last month amid the fifth wave of the pandemic. However, net absorption in the overall market recorded 56,200 sq. ft in March as tenant demand sustained. One of the major transactions involved flex space operator IWG, with the company continuing to expand its footprint by confirming an en-bloc lease of a lettable floor area of 64,800 sq. ft at 8 Queen's Road East (ex-Generali Tower) in Wanchai under the "Spaces" brand.
Alex Barnes, Head of Agency Leasing at JLL in Hong Kong said, "Flex space gives businesses access to fully equipped offices without requiring a long-term commitment, making it a go-to solution, especially during times of exponential business growth or market uncertainty. More companies looking to incorporate flex space into their real estate portfolio, which supports the expansion of flex spaces."
Nelson Wong, Head of Research at JLL in Greater China also commented, "The overall vacancy rate rose to 9.4% as of end-March due to the completion of new office supply. The vacancy rate in Central retreated further to 7.3%, but Kowloon East continued to register the highest vacancy rate among major office submarkets at 12.5%."
Overall net effective rents of Grade A offices dropped 0.2% m-o-m in March. Among the major office submarkets, Central registered a mild rental decline of 0.1%, while Hong Kong East experienced the biggest rental decline.
