Grade A office market records negative net absorption in June

HONG KONG, 20 July 2022 – Hong Kong's Grade A office market recorded negative net absorption of 96,800 sq ft in June, after the market witnessed positive take-up for eight consecutive months, according to JLL's latest Hong Kong Property Market Monitor released today.

The overall vacancy rate also rose slightly to 9.4% at the end of June, while the vacancy rate in Central edged up from 7.6% to 7.9% and the vacancy rate in Tsimshatsui improved to 10.2%.

Paul Yien, Executive Director of Office Leasing Advisory at JLL in Hong Kong, said: "It is normal to see take-up rate under pressure as the leasing market is disrupted by the pandemic. However, there are companies looking to expand in core business districts with Central's Grade A office rents dropping 28.3% from the market peak in 2019, which is attractive to tenants."

The market recorded some notable leasing transactions last month. Fubon Life Insurance leased 12,350 sq ft (lettable floor area) at 12 Taikoo Wan Road in Quarry Bay for relocation and expansion within the same building.

Overall net effective rents of Grade A office space dropped slightly by 0.1% m-o-m in June. Among the major office submarkets, Central's office rents remained flat, while Wanchai / Causeway Bay registered a relatively larger rental fall. The magnitude of the rental movement in the office submarkets remained small. 

In the retail market, Nelson Wong, Executive Director of Research at JLL, said: "Leasing momentum continued to improve in June. More retailers are willing to commit to longer leases as their confidence towards the business environment is gradually strengthening. We believe that retail sales will benefit from the second disbursement of consumption vouchers, which could support the retail leasing market."