The demand for Leasing of Grade A office buildings in Central was weak and the vacancy rate increased
This dragged down the overall rent of Grade A office buildings in Central. The average rent in September fell back to 125 yuan, down 1.7% month-on-month, the largest among the major commercial districts in Hong Kong. In addition, overall Grade A office rents fell by 1.1% month-on-month in September.
According to the “Hong Kong Property Market Watch” published by Jones Lang LaSalle yesterday, the overall rent of Grade A office buildings in Central fell by 1.7% in August after falling by 1.9% in August this year, and the monthly decline in September exceeded that of Hong Kong
In other commercial districts, the reason is that the recent market conditions are unclear. The industry mainly relies on rent reduction to retain tenants. It is expected that this round of decline will spread beyond the traditional core office market.
Alex Barnes, head of Jones Lang LaSalle’s commercial department, said that in September this year, the new lease transaction fell by 56% month-on-month, resulting in a negative absorption of 68,800 square feet in the month (more than moving out of the floor). The rental demand is mainly concentrated in the non-core area, and nearly half of the new lease transactions in September come from the non-core area.
Tenants are expected to move out of the core area
Although the rent of Grade A office buildings in Central has started to fall, there is still a significant gap between the rents of Grade A office buildings in other non-core areas. It is expected that tenants who intend to control costs will continue to move out of the core area.