Sale of Guangzhou-Shenzhen-Hong Kong Express Rail Link terminus site to re-define the West Kowloon office neighbourhood
Corporates needing to travel frequently between Hong Kong and Mainland China will likely have set their sights on setting up an office in West Kowloon or Tsimshatsui as new supply comes onto market over the next few years.
Office workers in the area will be with easy reach of Guangzhou-Shenzhen-Hong Kong Express Rail Link (XRL), putting them within a short 20 minute commute to Shenzhen.
Demand for office space in West Kowloon and Tsim Sha Tsui continues to outstrip supply, given the area’s strategic location. As of April 2019, the vacancy rate of Grade-A offices in West Kowloon and Tsim Sha Tsui stood at 1.7% – well below the Hong Kong average of 4.9% - per JLL data.
The first new additions of supply are set to hit the market in the third quarter of 2019 with the conversion of 15-storeys previously operating as Gateway Apartments into 360,000 square feet of Grade-A offices at The Gateway in Harbour City and WeWork committed 150,000 square feet for its first presence in Tsim Sha Tsui.
Next will be 2.8 million square feet of offices at the 3.1 million square feet site atop the XRL terminus in West Kowloon – the largest commercial development site listed in the Hong Kong government’s 2019-20 Land Sale Programme.
New supply arising from the development of the site, which is expected to be made available for tender in the second half of the 2019-20 financial year, is unlikely to reach the market for some time. Still, in view of the high desirability of the site, JLL says larger corporate tenants should start planning for the site and reach out to the buyer as soon as it is sold.
“The strategic location of the XRL terminus site will likely attract more mainland firms, especially financial firms, to establish their offices there. But competition among occupiers will be fierce. We expect the development to provide sizable floor plates, which will suit large corporate occupiers looking to consolidate their operations,” says Ken Tang, Head of Kowloon Markets at JLL Hong Kong.