Office market records negative net absorption of 189,300 sq ft in February
Rents fall 2.2% m-o-m
HONG KONG, 23 March 2020 – The overall office market recorded negative net absorption of 189,300 sq ft in February as the COVID-19 outbreak has led to tenants rethinking and delaying their decisions on office requirements, according to JLL’s latest Property Market Monitor released today.
A number of transactions were recorded outside of Central as tenants continued to seek cost-effective options. Among the more notable transactions, TransUnion Asia leased 17,700 sq ft at The Gateway Tower 5 in Tsimshatsui, to relocate and expand within the Harbour City portfolio.
More space is coming back to Central as negative net absorption amounted to 36,300 sq ft last month. The majority of the requirements occurred outside of the more premium office buildings as tenants remained cautious in managing their real estate cost. Notably, two law firms currently based in core Central committed to premises in Admiralty and Quarry Bay respectively.
Nelson Wong, Head of Research at JLL in Greater China, said: “Rental decline in the overall market worsened in February, down 2.2% m-o-m, as drop in leasing demand contributed to higher vacancy rates across all major office submarkets. Rents in Central contracted by 3.2% m-o-m to HKD116.1 per sq ft, the sharpest monthly decline since the Global Financial Crisis in 2008-09.”
Alex Barnes, Head of Markets at JLL in Hong Kong, said: “The current situation will weigh on sentiment and near term business planning across a number of industry sectors, which will lead some firms to hold back on relocation and expansion plans, where they have the time to do so. Some businesses are bucking the trend and taking advantage of greater transactional flexibility and deal structures. Ultimately, businesses with near term lease expiries will need to address these, alongside business plans, regardless of the immediate situation.”
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