Central District Commercial Building Rent

Rents in Central Commercial Building have hit record highs. In 2019, affected by the overall market, and large institutions moved out of Central, rents in the middle of the district were at a high level, or there was a slight decline.

Last year, the commercial market performed well. On rentals, rents in Central Commercial Buildings hit record highs. From mid-2017 to the end of 2018, almost monthly rents in Central were all new high. In the third quarter of last year, the Central Yangtze River Center was about 20,000 square feet. It was rented by a foreign-funded financial technology company. The rent was high at 225 yuan, which not only created a new rent for the building, but also the most expensive rent in the history of the Central District. The central area is the most expensive place in the world. Each 225 yuan is the highest rent unit in the world. This makes the Central District of this inch of gold more noble.

According to the data of Jones Lang LaSalle in November, the overall commercial vacancy rate was 4.1%, up 1 percentage point month-on-month, while the central vacancy rate remained at 1.5%, which is still extremely low. The vacancy rate is low, the owners can dominate the market, and the rent is naturally hard. However, there was a slight change in November. According to the rent forecast of the monthly commercial buildings in Knight Frank, the overall Grade A commercial rent in Central was 163.7 yuan in November, down 0.3% month-on-month, while the rent of Central Super-America was 197.9 yuan. It fell 0.7%. After 29 months in the Central District, rents fell for the first time.

After the rent has risen for more than two years, it has fallen back. Does it reflect that it has turned? In the market outlook, the rents in Central are not changing much in the short term. The main reason is that the vacancy rate is low. The big owners have very few vacant units, and even the rental rate is 100%. Many companies are on the waiting list, since There are almost no vacant units and there is limited room for rent to fall.

Chinese capital slows down expansion

Demand or supply has caused the rents to rise this year, and even fell. In terms of demand, the rent of commercial buildings in Central has been rising for more than two years. The main driving force is the renting of Chinese-funded institutions. In the past two years, large-scale Chinese institutions have come to rent office buildings in Hong Kong. In the first half of 2018, many large-scale rentals have been recorded. For example, the new commercial building of One Hennessy in Wanchai, which is owned by Huaying, started to rent in the first half of this year. 15 floors of the floor were rented by two Chinese-funded institutions, Shanghai Pudong Development Bank and KR Space, reflecting that Chinese-funded buildings are not soft.

In the second half of 2018, the attitude of Chinese-funded flats has changed significantly. It is more or less affected by the Sino-US trade war. The pace of expansion is inevitably slowed down. Coupled with the tightness of funds in the Mainland, it is difficult for individual institutions to mobilize funds to open in Hong Kong. The slowdown in Chinese demand has led to a reduction in rent seizures in Central and rental activities have continued. It is believed that the situation will continue until the first half of this year.

Large institutions moved away

On the supply side, there is no doubt that the Central District has been in a state of zero new supply for a long time, but it should be noted that under the effect of high rents in Central, many large institutions have moved out of Central. The situation is quite common in 2018, and the names involved are no longer in the middle. Small institutions, but large enterprises moved out. In the middle of last year, Goldman Sachs rented a total of 92,000 square feet of floor space in Causeway Bay, and abandoned the central floor of Central. Recently, there was a CSRC that rented the Yangtze River Center for many years and decided to move out of Central. Pre-rental about 200,000 square feet of floor in the East Centre of Quarry Bay, Hong Kong, becoming the largest rental in 2018. The above cases have not been calculated for the relocation of law firms and surveyors. In fact, rents in Central have repeatedly broken down, and the distance from non-core areas is getting farther and farther. If you move from Central to Hong Kong Island East, the rent can be reduced from 150 yuan per square to 50 yuan, saving three points and two rents. The operating costs can be reduced, and the Central Wanchai Bypass is about to open. The driving distance between Central and other non-core areas is shortened, and the incentive to move out of the Central District is even greater. In the reduction of demand and the move of large tenants, the rents in Central this year are expected to fall again.