Vacancy rate of Central’s high street shops improve after mainland China’s reopening

HONG KONG, 17 May 2023 – Vacancy rate of high street shops in Central improved for two consecutive quarters and dropped to 10.5% at the end of March thanks to the re-opening of borders with mainland China and the economic recovery, according to the latest figures from JLL.

Figures from JLL show the vacancy rate of high street shops in Central improved from 11.9% in the third quarter of 2022 to 10.5% in the first quarter of 2023.

Oliver Tong, Head of Retail at JLL in Hong Kong, said: “Retailers speeded up to make real estate decisions in the first quarter after mainland China announced to reopen the borders. There are about six street-level shops on Queen’s Road Central available for lease in January, but currently only two shops remain available for lease on this street. Galleries and luxury fashion brands and watches are the most active among the retailers,” 

Since there are fewer street-level shops in core Central available for lease, a landlord released nine shops with a total floor area of 9,221 sq ft on the second floor of The Galleria at 9 Queen’s Road Central for lease recently. JLL has been appointed as the leasing agent for the shops.

The nine shops (205, 206, 209, 210, 211, 212, 214, 215, 216/216A) range in size from 726 sq ft to 1,400 sq ft and are ideal for various trades such as jewellers, cafes, beauty and lifestyle. Shops 209-211 could be combined to create a 3,920 sq ft-shop or the tenant could lease all units for a 9,221 sq ft-shop. All units are currently vacant. The shops are connected by pedestrian footbridges to the Landmark, Prince’s Building and Standard Chartered Bank Building. The asking monthly rent of the retail space is HKD 140 per sq ft, with the total rent in excess of HKD 1.2 million.

"Given the market's scarce supply of medium-sized shops, podium retail spaces with smaller rental amounts would be good options for SME retailers," Tong added.

The vacancy of the four major shopping districts has been improving over the last four months. Cathie Chung, Senior Director of Research at JLL in Hong Kong, said: “The overall high street vacancy rate of the four core shopping districts dropped by 100 basis points in the first quarter of 2023 with improvement most visible in March. The performance of Central’s retail market was more resilient during the pandemic, compared to the other core shopping districts as it is relatively less reliant on tourism consumption,”

However, the retail rentals in Central high street rebounded by only 1.7% q-o-q in the first quarter of 2023. Chung expects the vacancy of retail space in Central will drop further as leasing sentiment has been bolstered in recent months due to improving market outlook, while a faster rental pick-up is forecasted to take place in the second half of this year alongside gradually recovering inbound tourism.