Central’s Grade A office rents record sharpest drop of all submarkets in September
Pullback in rents extend beyond CBD
HONG KONG, 23 October 2019 – Central’s Grade A office rents dropped 1.7% m-o-m in September, the sharpest fall among all other business districts and following a 1.9% m-o-m drop across the submarket in August, according to JLL’s Property Market Monitor released today.
Rents in the overall market continued to slide in September, declining by 1.1% m-o-m in September. Central recorded the sharpest drop, down 1.7% m-o-m to average HKD125 per sq ft, as landlords sought to retain tenants amid the recent uncertainty in the market. The pullback in rents extended beyond the city’s traditional core office submarkets, with rents in Kowloon East slipping 0.4% m-o-m.
The fall in office rents were because of the weakening occupier demand, as leasing volumes declined significantly. New lettings in Central were down 47% m-o-m in September. Leasing activity was largely dominated by renewals, reflecting the more accommodative stance of landlords.
Alex Barnes, Head of Markets at JLL, said: “The overall leasing market recorded a net withdrawal of 68,800 sq ft as new lettings declined by 56% m-o-m. As in previous months, leasing demand was concentrated in decentralised areas, accounting for close to half of all new lettings in September. Despite rents in Central starting to fall, there remains a significant rental differential compared with decentralised submarkets. Therefore, we still expect the trend of decentralisation to continue for cost conscious tenants.”
One of the notable transactions was CLP Hong Kong, reportedly leasing 11,400 sq ft at China Life Center in Hunghom, to accommodate expansion requirements.
In the industrial market, Cathie Chung, senior director of research at JLL, said: “Tenants in the warehouse leasing market remain watchful over their expansion plans amid the prolonged trade war combined with the weakening of the domestic retail sector. While leasing volumes were limited, Kwai Chung did see some activity with two leases totaling 33,000 sq ft at ATL Logistics Centre occurring during September.”
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