14% of office spaces were untenanted in Q1.
By: Tricia Ang | 13 April 2021
In Q1 2021, overall office space availability in Hong Kong hit a new high of 14%, the highest since Q2 2004. According to the latest study by Cushman & Wakefield, this has been led by larger occupiers such as multinational corporations (MNCs) giving up office space during the pandemic period.
Citywide rents went down 24.4% from the last peak in Q1, 2019, and Greater Central rentals dropped by 29.1% from the last peak values recorded in the same period.
“Although we see positive sentiment in Hong Kong building up gradually with vaccination in place, occupiers remained cautious and are still in the process of shopping for more cost-effective office options with favourable lease terms,” Cushman & Wakefield executive Director & head of office services, Hong Kong Keith Hemshall said. “We expect this downsizing process will continue for a few more quarters, thus driving [the] availability rate further upward till [the] end of 2022.”
Office space being surrendered amounted to 724,000 sq. ft. in Q1 2021, and mainly came from MNCs across sectors such as consumer products, manufacturing & sourcing (34%), banking & finance (23%), and professional services & real estate (21%).
Meanwhile, negative net absorption reached a new peak of 900,000 square feet in Q1. Rental decreases were the most significant in the Greater Central submarket, according to Cushman & Wakefield, with a -21.4 percent YoY fall.
“With record high negative net absorption, any new supply coming up in the market is likely to drive further rental decline,” Cushman & Wakefield managing director, Hong Kong John Siu said.