Office market records positive take-up in February amid fifth wave

HONG KONG, 22 March 2022 – The Grade A office leasing market recorded positive net absorption for the fifth consecutive month in February amid the current wave of Covid-19 infections, according to JLL's latest Hong Kong Property Market Monitor released today.

The leasing market was quiet in February due to tightened social distancing measures. However, net absorption in the overall market recorded 276,500 sq ft last month as tenant demand continued to recover. One notable expansion case is that YF Life Insurance International leased a total gross floor area of 17,400 sq ft at Grand Century Place Tower 2 in Mongkok and The Gateway Tower 6 in Tsimshatsui for new agency office use.

The overall vacancy rate continued to improve and dropped to 9.1% as of end-February. The vacancy rate in Central retreated to 7.4%, while Kowloon East continued to register the highest vacancy rate among major office submarkets at 12.4%. Overall net effective rents also remained flat last month, while Central registered mild rental growth.

Alex Barnes, Head of Agency Leasing at JLL in Hong Kong, said: " The impact of the latest wave of Covid-19 cases is relatively minimal compared to the first wave of the outbreak in 2020. Decision makers have been in this position before and long-term plans continue to hold firm across the majority of the office leasing market."

In terms of the retail market, Nelson Wong, Head of Research at JLL in Greater China, said: "The retail leasing market turned quiet in February, largely due to the fifth wave of the pandemic. Nonetheless, some retailers remained confident in the market and committed to new outlets on the back of more affordable rentals. The investment of retail properties also remained active last month, with several sizeable deals recorded in non-core areas."