Over 98% of 2024 net absorption concentrate in five key office submarkets
Minimal major leasing activity leads a negative net absorption in December
Hong Kong, 23 January 2025 – In 2024, approximately 98.3% of Grade A office net absorption originated from the five key submarkets: Central, Wanchai/ Causeway Bay, Hong Kong East, Tsimshatsui and Kowloon East, according to JLL's latest Hong Kong Monthly Market Dynamics report released today. This trend highlights the increased attractiveness of major business districts to tenants following significant rent corrections.
Alex Barnes, Managing Director at JLL in Hong Kong, said: "About 98.3% of Grade A office net absorption was concentrated in the five key office submarkets last year. We believe one of the reasons for this significant share of leasing demand is that overall Grade A office rents have dropped by around 40% from the peak in 2019. Additionally, several new office buildings have been completed in these business districts in recent years. With improved specifications, higher quality, and larger floor plates, these new offices are attractive to tenants who are both cost-conscious and looking to enhance their workplace."
Last month, notable transactions included Oak Tree Investments leasing 14,600 sq ft (LFA) at Two IFC in Central, relocating from Three Garden Road.
The overall Grade A office leasing market recorded a negative net absorption of 44,600 sq ft in December 2024, primarily attributed to a lack of sizable transactions rather than weakened overall demand. As of the end of December, the overall vacancy rate rose slightly by 10 bps to 13.2%. In particular, Hong Kong East and Kowloon East's vacancy rose to 12.4% and 18.6%, respectively, while vacancy in Central remained at 11.6%.
Cathie Chung, Senior Director of Research at JLL, noted: "December witnessed a marginal month-on-month decrease of 0.5% in overall net effective rent. Central and Kowloon East recorded further declines, with rents falling by 0.4% and 0.8%, respectively. Additionally, the Wanchai/ Causeway Bay and Hong Kong East submarkets saw rents drop by 0.5% and 0.8%, respectively. With ongoing new office supply entering the market this year, rents will continue to face downward pressure while vacancy rates are expected to rise."
| Grade A Office Vacancy | ||||||
|---|---|---|---|---|---|---|
| Period | Overall | Central | Wanchai /Causeway Bay | Hong Kong East | Tsimshatsui | Kowloon East |
| End-Dec 24 | 13.2% | 11.6% | 10.0% | 12.4% | 8.9% | 18.6% |
| End-Nov 24 | 13.1% | 11.6% | 9.9% | 12.2% | 8.9% | 18.5% |
Source: JLL Research
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