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Market slowdown weighs on office rents
HONG KONG, 19 December 2018 – Demand for Grade A office space continues to soften. The office leasing market recorded a net withdrawal of 58,700 sq ft in November as demand failed to keep up with expiring leases, according to JLL's Property Market Monitor released today.
Though the amount of vacant space returned to the leasing market remains small, it does reflect the softening in leasing demand recorded in recent months. Tsimshatsui, Hong Kong East and Kowloon East saw the least amount of space returned, as decentralisation continued to drive leasing activity in these submarkets. Roche, for example, reportedly leased a whole floor with a floor area of 12,600 sq ft at FTLife Tower in Kowloon Bay, relocating from Causeway Bay.
In Central, leasing activity was subdued against a tight vacancy environment. As a result, opportunities in the submarket were limited to marketable and surrender space options. In one of the more notable deals, Jane Street Capital, reportedly leased half a floor in Chater House with 9,200 sq ft to accommodate expansion plans.
Alex Barnes, Head of Markets at JLL, said: "Supported by the relocation of tenants from Central, rents in Wanchai/Causeway Bay posted the fastest growth among all major submarkets last month, up 0.7% m-o-m. Rents growth in the overall market continued to rise albeit at a slower pace, up by 0.3% m-o-m."
Denis Ma, Head of Research at JLL, said: "Investment volumes remained subdued amid ongoing economic uncertainty and the potential for further interest rate hikes. With the yield expectations of buyers rising and vendors remaining firm on asking prices, this trend will continue in short run."
Source: Research, JLL
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