Non-core area commercial building
In Central, which has broken the rent of the world’s most expensive commercial buildings, the rent is still rising, and there is still a long way to go with the non-core area rents, so that the non-core area rentals will rise significantly, and rents are expected to catch up.
According to the latest commercial report of DTZ, the latest rental trends in various commercial districts in Hong Kong are mentioned. The highest rent area is of course Central. The highest quality rent is as high as 164.2 yuan, up by 0.5% quarter-to-quarter, while the overall central district has a quarterly increase of 0.7%. However, compared to other districts, it is the smallest increase. All the increases were above 1% in Wan Chai/Causeway Bay, Island East, Island South, East Kowloon, West Kowloon and Tsim Sha Tsui. Hong Kong Island’s monthly increase was as high as 2.5%, which was the strongest increase in the past five years. Outside of Central, rents rose in full.
Commercial building new rent flat non-core area is popular
The rent increase has slowed down and is not as good as the non-core area. The main reason is two. First, the current vacancy rate in the Central District is extremely low. The vacancy rate is less than 1% in the case of the Super A, and the individual commercial buildings are 100% leased. As a result, there are fewer rental activities and there are not many rentals. The increase in rent was not significant. What’s more, Central is the most expensive area in the world. Once there is a renter in the area, the price of each base will be more than 200 yuan, and the base increase will naturally decrease.
Second, there are new commercial buildings in the non-core area and the rents are cheap, that is, attracting tenants to relocate. Recently, he talked with Stanley Real Estate (01972) Chief Executive Bai Deli about the commercial city road. He said that the Taikoo Square commercial building rental of the group is very ideal, and a reconstruction project in Taikoo City is on the verge of completion, with a total floor area of 1 million square feet. The pre-leasing rate has been Nearly 100%. It is mentioned why it is possible to attract so many tenants, and even some of the law firms and accountants who have rarely appeared in Hong Kong Island in the past are now gathered in Taikoo Place. He mentioned that the newly completed office buildings on Hong Kong Island are all super-class A and the rent is one-third of Central. In fact, in the past year, non-traditional core areas such as Hong Kong Island East and Wong Chuk Hang have recorded more than 50,000 square feet of transactions, and more than 100,000 square feet of rentals have appeared more than once, due to new floors in non-core areas. More, available for tenants to choose.
The information shows that the average rent in Central is about 137.9 yuan, and the second highest is Wan Chai and Causeway Bay. The lease is about 77.3 yuan. It can be seen that if you move out of Central, you can save half of the rent in any commercial area. If you move to Hong Kong Island East and Wong Chuk Hang can save up to 6 to 80%. For most organizations, cost savings must be considered. If Central rents continue to rise, they have to study relocation.
Will Central rent start to call back?
Of course, the Sino-US trade war broke out, coupled with the stock market decline, etc., became a key factor affecting the commercial rental market. I have talked with many office rental agents. So far, there has not been a downward trend in the rental atmosphere. The institutions have not stopped expanding or opening up. Of course, if the trade war intensifies, affecting the local economy and causing a worsening business environment, it will hit the rental business. market.
Low vacancy demand, central rent is hard to fall
At present, the two major factors still support the rent of commercial buildings in Central. First, the new supply is almost zero. In the next one to two years, no major new projects will be completed (the fastest waiting for the Murray Road car park project, which is expected to be completed in 2022). The current vacancy rate is less than 1%. The owner has no pressure to reduce the price.
Second, demand is still going on. In recent months, emerging financial technology companies have been renting Central, and the Yangtze River Center has a record-breaking rent of 225 yuan per baht. It is the financial technology company that rents it. Rents in Central are hard to fall, and it is sure that there will be more rental activities in non-core areas. The rental increase is expected to outperform Central.