PRC co-working operators continue their march into the HK office market

HONG KONG, 24 June 2018 – PRC co-working operators continue to expand in the Hong Kong office market, according to JLL's Property Market Monitor released today. KR Space, a Beijing based co-working operator, is the latest operator to enter the market, leasing seven floors at One Hennessy in Wan Chai.

The co-working operator will occupy 72,300 sq ft at the new Grade A office building for their first centre in Hong Kong. KR Space is also reportedly negotiating additional locations around the city.

PRC banks were also active in the office leasing market. Shanghai Pudong Bank has leased eight floors covering 85,400 sq ft at One Hennessy to accommodate expansion plans.

Quarry Bay is another business district that continues to draw tenants from core business districts with another two law firms, leasing a combined 36,400 sq ft at One Taikoo Place, making the move into the district.

Alex Barnes, Head of Markets at JLL, said: "Sustained demand and tight availability combined to push Grade A offices rents in Central up 1% m-o-m in May, the strongest growth over the past 15 months. For the market as a whole, office rents climbed 0.7% m-o-m. With vacancy in Central still extremely tight, we've started to see more PRC companies and tenants with larger space requirements shifting their focuses to Wan Chai and Quarry Bay to accommodate expansion,"

"Competition persists from tenants seeking quality space across the Hong Kong Island office market. There is such strong demand for large space on Hong Kong Island that landlords are trying to create opportunities against existing expiries," he added.

Denis Ma, Head of Research at JLL, said: "The arrival of KR Space continues a recent trend of PRC-based co-working operators setting up locations in the city, joining the likes of Shanghai-based Naked Hub (before it was acquired by WeWork), Beijing-based Ucommune and Guangzhou-based ATLAS. The growing requirements of these operators, along with traditional serviced office operators branching into the co-working space, is rapidly absorbing larger tracts of floor space available in the more affordable segments of the city's Grade A office market, putting a floor on rents. Coupled with sustained demand from PRC corporates in the top-end of the market, tenants are likely to face an increasingly tight market moving forward."