News release

Decentralisation demand dominate the office leasing market

95% of new lettings are outside of Central

August 10, 2020

HONG KONG, 10 August 2020 – As tenants are focusing on cost-saving options, 95% of the leasing requirements/new lettings were filled outside of Central in June, according to JLL’s latest Property Market Monitor released today. It is higher than the 73.7% recorded in June 2019.

Most of the tenants are looking for office space outside of Central against backdrop of a weakening economy. For instance, IWG reportedly leased two office floors amounting to 32,900 sq ft at Hysan Place in Causeway Bay to take over the spaces previously withdrawn by WeWork and open a new centre under the “Signature” brand. Meanwhile, Swarovski reportedly leased a whole floor at Citi Tower, One Bay East in Kwun Tong to relocate out of Hong Kong East.

The vacancy rate in Central rose to 5.6% in July as weak demand resulted in negative net absorption amounting to -136,500 sq ft. Aside from that, surrender space also has been rising in the submarket as it amounts to slightly above 460,000 sq ft, making up about 35% of the surrender space in the overall market.

Alex Barnes, Head of Markets at JLL in Hong Kong, said: “Rental decline outside of Central sped up in June with the overall market declining by 2.4% m-o-m. The sharpest rental contraction occurred in Tsimshatsui and Kowloon East recording a 2.6% m-o-m and -2.7% m-o-m slide respectively as the rental gap with Central narrowed.”

In the retail market, a number of international retailers are looking to shut their flagship stores, including the Topshop, GAP and Adidas stores on Queen’s Road Central. Nonetheless, retail operators targeting the domestic market are still keen on expansion. Outback Steakhouse reportedly leased the first floor (3,000 sq ft) at Entertainment Building in Central for a monthly rent of HKD 300,000. The operator will run a new fast-food concept for the premise. Meanwhile, lifestyle retailers, MUJI launched its largest flagship (24,000 sq ft) at Telford Plaza in Kowloon Bay, with a focus on food items.

Nelson Wong, Head of Retail at JLL in Greater China, said: “International mass retail operators targeting local customers are more interested in expanding in Hong Kong as rental levels become more agreeable. We will likely see a more diverse retail environment in the medium to long term.”

Grade A Office Vacancy




Wanchai /

Causeway Bay

Hong Kong East


Kowloon East

End-June 20







End-May 20







Source: JLL Research

About JLL

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