Central Grade A office market will pick up gradually as business activities resume

HONG KONG, 19 July 2021 – Central's Grade A office leasing market improved in the first half of 2021. Its office leasing market outperformed major core commercial districts during the period, with a lift in gross leasing volume, the measurement of real tenant movement. JLL believes that Central's office leasing market will continue to improve with rents expected to reach their bottom in the next 12 months, and demand to continue to be strong leading into 2023.

With most businesses functioning close to pre pandemic levels of physical operations, office market activities have picked up. Businesses are revisiting properties' decision making in recent months as business confidence builds in the city, with Central’s office market attracting an uptick in activity and focus. Figures from JLL’s research show that the gross leasing volume in Central recorded a 39.4% q-o-q and 69.1% y-o-y increase in the second quarter of 2021. The vacancy rate also retreating from 7.5% at end-April to 7.4% as at end-June.

Central’s office market was one of the most resilient in the Grade A office market, supported by increased leasing demand. The demand for Central’s Grade A office market remain strong. Located in the heart of Hong Kong's central business district, 36-storey, The Henderson, is developed by Henderson Land, one of the largest developers in the city. It will be the newest large floor plate building in Central in 18 years, with the project expected to be a key focus of Central’s Grade A1 office market moving forward.

Alex Barnes, Head of Agency Leasing at JLL in Hong Kong: “We are honoured to be appointed by Henderson Land as the lead agent for The Henderson. We believe the project will be an icon of Central, and a globally recognised, world class building upon completion. It will naturally attract some of the worlds’ most exceptional businesses and brands. The office leasing market has turned active in the last few months as occupiers resume their real estate decision, including PRC firms who continued to expand in Hong Kong in the first half of this year”.

Paul Yien, Head of Landlord Representative at JLL in Hong Kong, said: “The previous market and rental consolidation have released more choices of offices in Central. The district has attracted banking and financial institutions who have higher affordability to take the opportunity to leased office space, which boosted the leasing transactions and led Central to outperform the market. It will attract more PRC firms to expand into Hong Kong and set up new offices if the border between Hong Kong and mainland China and Macau reopens in the second half of this year and this will support the office leasing market as a result".

For the market outlook, the cross-harbour section of East Rail Line (Hung Hom to Admiralty Section) is scheduled to be completed in 2022. This will shorten the travel time between Central/Admiralty and the New Territories and will enhance Central as the commercial district with the most connected transportation network after the transportation linkage is strengthened. Paul believes Central’s office leasing market will continue to see growth in the next few years, following the improvement in traffic networks and as banking and financial institutions continue to expand.