Co-working Operators Main Driver of Hong Kong Office Leasing Activity
According to JLL's latest Hong Kong Property Market Monitor report, despite lingering uncertainty surrounding the global economy and a slumping local stock market, co-working operators remained a major source of demand in the office leasing market in December last year.
Eaton House, a co-working operator, reportedly leased 14,000 sq ft at Three Garden Road in Central, doubling their footprint in the building. This also demonstrates that companies are still willing to expand in Central despite market high rentals.
In the overall office market, the seasonal slowdown ahead of the traditional holiday period contributed to negative net take-up of 94,000 sq ft last month. Decentralisation remains the key theme of the office leasing market with insurers continuing to relocate into non-core office submarkets. CM Hulder Insurance Brokers reportedly leasing 12,000 sq ft at South Island Place in Wong Chuk Hang, relocating out of Sheung Wan.
Alex Barnes, Head of Markets at JLL reports, "Tight vacancy in traditional core markets helped drive rents in the overall market up by 0.6% m-o-m. The tightest market in Hong Kong, Tsimshatsui, posted the fastest rental growth in December, up 1.4% m-o-m. Decentralisation will continue as the rental gap between traditional core-business districts and emerging core locations provides significant rental savings. The Central-Wan Chai Bypass and Island Eastern Corridor Link, scheduled to imminently open, will support more tenants to consider relocation outside Central. Despite the overall decentralization trend, Central demand remains strong, with competition for quality vacancy a common occurrence."
Denis Ma, Head of Research at JLL also commented, "The slowdown in sales volumes has failed to dent pricing in the strata office sales market with investors continuing to focus on acquiring offices in secondary business locations offering higher returns. In one of the more notable transactions, the 22/F at Emperor Group Centre in Wanchai was reportedly sold for HKD 160.8 million or HKD 17,248 per sq ft, while a small unit at Millennium City 3 in Kwun Tong was sold for HKD 106.1 million or HKD 13,034 per sq ft. Both transactions were among the top three highest achieved on record in their respective buildings, in terms of unit price."