Office market records positive take-up for the eighth consecutive month

HONG KONG, 21 June 2022 – The positive momentum of the Grade A office leasing market continued in May, with overall net absorption reaching 129,000 sq ft, according to JLL's latest Hong Kong Property Market Monitor released today. It marks the eighth consecutive month that Hong Kong's Grade A office market recorded a positive take-up.

The office market remained active last month. The flight to quality trend prevailed as tenants actively looked to upgrade office space. In one recent example, China CITIC Bank International confirmed a pre-lease of six floors with a total lettable floor area of approximately 150,000 sq ft at Two Taikoo Place in Quarry Bay, relocating from within Taikoo Place.

Alex Barnes, Managing Director at JLL in Hong Kong, said: “Grade A office rents are significantly lower than the market level three years ago, and many tenants are now looking for opportunities to upgrade their office space. New Grade A office buildings with features and technology that can support tenants' sustainability, health and wellness objectives will have an advantage in attracting tenants."

In the overall office market, the vacancy rate dropped to 9.3% as of end-May. The vacancy rate in Central rose slightly to 7.6%, while Kowloon East continued to register the highest vacancy rate among major office submarkets at 12.6%.

Overall net effective rents dropped slightly by 0.2% m-o-m in May. Among the major office submarkets, Central's rents remained flat, while Hong Kong East experienced the biggest rental decline.

In the retail market, total retail sales rebounded by 11.7% y-o-y in April with significant support from the disbursement of consumption vouchers. Retail sales are expected to grow further following the loosened social distancing measures and the second disbursement of consumption vouchers.

Nelson Wong, Head of Research at JLL in Greater China, said: "Leasing momentum in the retail market picked up slightly in May alongside the stabilising pandemic situation. Retailers in general have been gradually resuming their expansion plans and are looking to take advantage of the limited bargain hunt opportunities at certain prime spots." 

Source: JLL Research