Grade-A office vacancy rate plunges to 1.7% in September

Tight supply trumped robust demand.

The Grade-A office market did not see many activities last month despite robust demand due to an extremely tight supply situation, with the overall average vacancy rate reaching as low as 1.7% in September.

According to a release from Knight Frank, despite strong leasing demand, the Grade-A office market was stable last month amid limited available space, particularly in core business areas.

Most firms opted for renewing their leases rather than relocation due to a lack of alternatives. The key demand drivers remained Mainland Chinese firms, which continued to favour Central for setting up offices.

Here's more from Knight Frank:

Looking ahead, David Ji, Director, Head of Research & Consultancy, Greater China at Knight Frank said given sustained demand and low vacancy rates, we remain positive towards the long-term outlook for Grade-A offices in Hong Kong.

We expect rents in Central to increase 10% this year and another 5% in 2016. In Kowloon East, Grade-A office rents could drop 0-5% next year with increased supply.