CB Richard Ellis believes that companies will be more cautious this year, and rents are expected to fall by about 10%
Looking back on the market conditions in 2019, CB Richard Ellis said that due to the global economic risk factors, the demand for Hong Kong’s Grade A office market has slowed. Although new supply completed during the year recorded 2.3 million square feet, net absorption for the year was only 403,000 square feet.
730,000 square feet of floor space moved out of Central District last year
The high rental costs in the core area, coupled with the newer and less expensive space supply in non-core areas, continue to attract tenants to “decentralization”. Last year, approximately 731,000 square feet of office space moved out of the core area.
In terms of vacancy rate, the vacancy rate in Central District rose from 1.3% at the end of 2018 to 3.4% at the end of 2019, a new high since 2014
Office rents in Central District also saw a year-on-year decrease of 5.9%, the largest annual decline since 2012. However, the trend of “decentralization” has kept the vacancy rate on Hong Kong Island East at a low level and even supported the rental level to increase by 6.4% year-on-year. The bank said that after various instabilities in 2019, companies will become cautiously optimistic in 2020, and overall expansion demand will continue to slow down. Grade A office rents are expected to fall by 5% to 10% throughout the year.