Hong Kong records positive office absorption for the first time since 2019

Overall net absorption was 116,300 sq ft in May.

Despite plenty of marketable space, JLL says overall net absorption was positive for the first time since July 2019, recording at 116,300 sq ft in May. The real estate reconfiguration trend precipitated by the pandemic continued with more corporate tenants opting to upgrade their office premises, especially as rents have corrected to more affordable ranges. 

For instance, food delivery company Foodpanda reportedly leased two floors (39,000 sq ft, GFA) at Times Square in Causeway Bay. 

Here’s more from JLL:

The gross leasing volume in Central has improved in recent months, with the vacancy rate in the submarket retreating to 7.2% as of end-May. Among the more significant leasing transactions, flexible workspace provider The Executive Centre reportedly leased a floor (15,800 sq ft, LFA) at AIA Central. 

While a handful of buildings have recorded rental growth during the month, rents in the overall market still declined by 1.4% m-o-m as landlords in general were more willing to lower their asking rents to entice new tenants. Among the major office submarkets, Tsimshatsui experienced the biggest rental decline, whereas rents in Central were relatively more resilient. 

There were some sales transactions involving Grade A office in Central recently. Notably, a high-level unit at 9 Queen's Road Central was sold for HKD 126 million (HKD 45,000 per sq ft), while a mid-level unit at The Center was offloaded by a local investor for HKD 72.8 million (HKD 33,471 per sq ft).