Luxury brands continue to expand in Hong Kong’s office market
Office vacancy rate remains flat in February
HONG KONG, April 9, 2024 – Luxury brands which benefited from the return of mainland tourists are one of the key drivers in Hong Kong’s office leasing market and continue to support demand, according to JLL's latest Hong Kong Property Market Monitor released today.
Among new lettings, LVMH leased two floors of a lettable floor area of 47,200 sq ft at Two Taikoo Place in Quarry Bay, expanding from Dorset House in the same district.
The overall vacancy rate of Grade A offices stayed at 12.9% as at end-February. Central and Wanchai / Causeway Bay's vacancies rose marginally by 0.1 and 0.2 percentage points, respectively, while vacancy in Hong Kong East dropped by 0.6 percentage points. The overall market of Grade A offices recorded a negative net absorption of -14,600 sq ft in February.
Alex Barnes, Managing Director and Head of Office Leasing Advisory at JLL in Hong Kong, said: "FIREBS (Finance, Insurance, Real Estate and Business Services) continues to be the key driver of the city's office leasing market, accounting for 36.7% of total new lettings as of end 1Q24. Luxury brands have also been particularly active. They have benefited from the improvement in Hong Kong's retail market and are seizing the opportunity to negotiate favourable lease terms and upgrade their office spaces during the office market downturn.
Cathie Chung, Senior Director of Research at JLL, said: "Overall net effective rent of Grade A offices dropped further by 1.4% m-o-m in February. Among the major office submarkets, rents in Central and Hong Kong East dropped further by 2.4% and 0.6%, respectively, while Tsimshatsui's rental remained flat."
| Grade A Office Vacancy | ||||||
|---|---|---|---|---|---|---|
| Period | Overall | Central | Wanchai / Causeway Bay | Hong Kong East | Tsimshatsui | Kowloon East |
| End-Feb 24 | 12.9% | 10.5% | 10.0% | 13.2% | 9.5% | 18.5% |
| End-Jan 24 | 12.9% | 10.4% | 9.9% | 13.8% | 9.1% | 18.4% |
Source: JLL Research
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For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.8 billion and operations in over 80 countries around the world, our more than 106,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.