Vacancy rate in Central surpasses 7% for the first time since 2004

HONG KONG, 25 January 2021 – The vacancy rate in Central’s Grade A office market rose to 7.3% in December last year, surpassing 7% for the first time since 2004, according to JLL’s latest Hong Kong Property Market Monitor released today.

The vacancy rate will continue to increase as there is a sizeable amount of marketable and surrender space anticipated to come back to the market in the upcoming months. Leasing activity was limited towards the end of the year, with only a handful of small transactions recorded.

Overall, Grade A office net absorption was -175,600 sq ft last month due to the ongoing occupier downsizing trend driven by the economic recession. Moreover, DHL reportedly leased 90,900 sq ft (GFA) at International Trade Tower in Kwun Tong, downsizing and relocating from Kowloon Bay.

Alex Barnes, Head of Office Leasing Advisory at JLL in Hong Kong, said: “The rental decline trajectory continued across all major office submarkets, with net effective rents in the overall market dropping 1.1% m-o-m in December. Tsimshatsui experienced the most significant contraction in rents during the month. Its rents dropped 1.7% m-o-m, while those in decentralised submarkets remained relatively resilient.”

In retail market, Nelson Wong, Head of Research at JLL in Greater China, said: “As high street shops rents retreated to almost 2003 level, the market saw some high-end retailers committed new stores in core shopping areas. Meanwhile, a number of vacant shops were filled by retailers focusing on domestic demand. The improving leasing momentum has helped to ease the vacancy pressure marginally in high streets.”

Source: JLL Research