Grade A office vacancies widened to 6.1% in January

As a result, rents dropped the sharpest by 1.1% MoM to $120 psf.

The overall vacancy rate of Grade A offices rose to 6.1% in January, compared to the 6% posted in December, according to data from JLL.

Amongst major business districts, Kowloon East had the largest vacancy rate at 13.2%, up from 13.1% in December 2019. This was followed by Tsimshatsui at 4.3%, Wanchai/Causeway Bay at 4.4%, Central at 4% and Hong Kong East at 2.8%.

Meanwhile, overall office rents dipped 0.9% MoM in January. Central Grade A office rents dropped the sharpest by 1.1% MoM to $120 psf amongst Hong Kong’s core business districts, marking the lowest in more than five years.

Leasing demand was also weak in Central as new lettings dropped 49% MoM. Leasing activity was primarily driven by small expansions within the submarket. For instance, China Guangfa Bank has leased 13,000 sqft at One Exchange Square to relocate and expand out of another Grade A building within Central.

“The overall Grade A office market recorded a net withdrawal of 173,600 sq ft last month. Some pockets of activity exist, with the majority of demand in decentralised locations. Their interests are largely focused on small lump sum assets in non-core areas, pricing below $30m,” said Alex Barnes, head of markets at JLL in Hong Kong.