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HONG KONG

Decentralisation of multi-national companies boosts pre-leasing of new buildings

Grade A office rents edge up 0.2% in May


HONG KONG, June 21, 2017 – Multi-national companies were among the most active in office leasing market in May as they continued to seek out cost effective space outside of Central. Those making the move targeted upcoming new buildings, boosting pre-leasing levels, according to JLL's latest Monthly Market Monitor released today.

Multi-national companies pre-leased about 135,600 sq ft in upcoming Grade A office buildings last month. A consultancy firm reportedly pre-leased 38,200 sq ft at Lee Garden Three in Causeway Bay while a Taiwanese bank committed to a whole floor (21,000 sq ft) at Atelier K 11 in Tsimshatsui.

In Central, in-house expansion requirements accounted for about 55% of all new lettings. Demand was largely from the banking and finance sector and concentrated in the top-end of the market. At One International Finance Centre, Bank of Singapore expanded by 16,600 sq ft while China Development Bank expanded by 18,300 sq ft.

Despite an active leasing market, the Grade A office market still recorded a net withdrawal of 63,900 sq ft in May with average monthly rent edging up 0.2% to HKD70.6 per sq ft.

Alex Barnes, Head of Markets at JLL, said: "With vacancy at just 1.8% at the end of May, demand in Central has pushed rents to the cusp of surpassing all-time highs.  Quality large office space is in short supply in Central.  This limited option environment will support decentralisation."  

Denis Ma, Head of Research at JLL, said: "The Central office market remains on a firm footing despite the recent uptick in tenant decentralisation. With vacancy still at very tight levels and sustained PRC demand, we expect rents in Central to continue to edge higher through the remainder of the year."

Grade-A Office Vacancy Rates
PeriodOverallCentral

Wanchai /

Causeway Bay

Hong Kong EastTsimshatsuiKowloon East
End-May 20174.3%1.8%2.7%1.8%2.1%9.7%
End-April 20174.5%1.7%2.8%3.4%2.1%9.7%

Source: Research, JLL

 

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