News release

Office market records first positive net take-up in four months

The return of travellers restarts the growth engine of retail market

March 21, 2023

Yvonne Liu

Public Relations Director, Marketing Communications, Hong Kong
+852 2846 5264

HONG KONG, March 21, 2023 – Hong Kong's Grade A office market recorded positive net absorption in February after it recorded negative net absorption for three consecutive months, according to JLL's latest Hong Kong Property Market Monitor released today.

The overall market recorded a positive net absorption of 16,900 sq ft last month, with activities and inspections picking up during the month.

Among a handful of new lettings, professional service company Deloitte leased two floors with a total gross floor area of 38,800 sq ft at The Millennity in Kwun Tong, to consolidate a part of their office space at Admiralty. Its newly acquired business unit will also move to the building from Tai Kok Tsui.

Alex Barnes, Managing Director at JLL in Hong Kong, said: "The overall vacancy rate climbed to 12.3% as at end-February, partly due to the completion of S22 in Wong Chuk Hang by Empire Group. The office leasing market continued to improve; we received more leasing enquiries from insurance and financial institutions. We also saw more tenants looking for new office buildings to upgrade their workplace, which could help to absorb new office supply."

The overall net effective rents dropped by 0.7% m-o-m last month. Among the major office submarkets, rentals in Central and Wanchai/ Causeway Bay dropped by 0.8% and 1.2%, respectively, while Tsimshatsui's rent remained flat.

In the retail market, total retail sales rose by 7.0% y-o-y in January, thanks largely to the resumption of cross-border travel. Among the retail categories, jewellery, watches and clocks, and valuable gifts saw the biggest growth in sales by 23.1%. However, online sales declined by 4.2% y-o-y in January – the first drop in three years.

Nelson Wong, Executive Director of Research at JLL, said: "There were nearly 500,000 arrivals in January, compared to around 160,000 in December last year. This, however, only represents about one-tenth of the peak level in the pre-Covid period. The tourism level is expected to rise more visibly following the scrapping of quotas on inbound arrivals in February, which is the reason the leasing sentiment picked up last month, with several transactions being registered in prime high streets,”

Notably, the ground floor shop (1,000 sq ft) at 14 Canton Road in Tsimshatsui was reportedly leased to a chain pharmacy for a monthly rent of HKD 500,000, representing a 55% discount from the rentals of the last long-term lease tenant – Puyi Optical.

Grade A Office Vacancy
Period Overall Central Wanchai / Causeway Bay Hong Kong East Tsimshatsui Kowloon East
End-Feb 22 12.3% 9.0% 10.2% 11.1% 11.1% 19.7%
End-Jan 22 12.2% 8.9% 10.3% 11.0% 11.0% 19.6%

Source: JLL Research


About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $20.9 billion, operations in over 80 countries and a global workforce of more than 103,000 as of December 31, 2022. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.