News release

Central office market records two consecutive months rental growth

Relocation, consolidation the focus as occupiers continue to reconfigure their plans

October 20, 2021

HONG KONG, 20 October 2021 – In an early sign of recovery, Central recorded rental growth for two consecutive months with a rental growth of 0.6% to HKD 90.3 per sq ft in September. The previous rental growth in Central's office market was in May 2019. The growth was mainly driven by demand for premium office space in the submarket, according to JLL's latest Hong Kong Property Market Monitor released today.

Overall net effective rents dropped by 0.1% m-o-m with average monthly rent of HKD 55.7 per sq ft in September. Among other major office submarkets, Hong Kong East had a relatively larger rental decline.

The vacancy rate in Central increased to 7.8% as of the end of September. Nevertheless, the amount of surrender space in the submarket lessened during the month, suggesting that the corporate downsizing trend has slowed down. The overall market recorded a net absorption of -180,100 sq ft in September.

Alex Barnes, Head of Agency Leasing at JLL in Hong Kong, said: "Most leasing activity involved relocation or consolidation as occupiers continue to reconfigure their real estate plan and seek quality office space."

Notably, Nike reportedly leased 54,000 sq ft (GFA) at International Trade Tower in Kwun Tong to relocate from Kowloon Bay.

On the industrial sector, Nelson Wong, Head of Research at JLL in Greater China, noted: "The merchandise trade environment continued to recover in August, underpinning the industrial sector. A steady increase of 27% of aggregate trade value was registered, with total imports and exports rising by 28.1% and 25.9% respectively. We saw more transactions and inquiries in the leasing market, with local grocery and FMCG sectors taking the lead. For instance, Mannings committed to approximately 50,000 sq ft of warehouse space at ATL Logistics Centre in Kwai Chung for expansion."

Grade A Office Vacancy
Period Overall Central Wanchai / Causeway Bay Hong Kong East Tsimshatsui Kowloon East
End-Sept 21 9.8% 7.8% 10.3% 7.2% 9.9% 13.8%
End-Aug 21 9.6% 7.7% 9.9% 7.1% 10.3% 13.1%

Source: JLL Research

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