Companies exit Central in droves amidst staggering rental costs

Goldman Sachs was the latest to pull out from the CBD.

Companies are moving out of Central in droves with multinational heavyweights Goldman Sachs being the latest to pull out as grade A office rents continue to trend even higher in the traditional business district, according to CBRE Hong Kong market view.

Both Goldman Sachs and securities brokerage firm Mason Financial are moving to Lee Garden Three in Causeway Bay with the former committing to five floors worth 81,200 sq ft whilst the latter has leased 16,200 sq ft.

This comes as Greater Central rents extend their steep climb after rising 2% QoQ in Q1 as vacancy dropped to the lowest since September 2015 at 1.1%.

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“Notwithstanding the Island, new completions in Kowloon, include Hong Kong Pacific Tower in Kowloon Bay and China Shipbuilding Tower in Cheung Sha Wan, are also becoming popular office destinations," said Alan Loke executive director, Advisory & Transaction Services - Office for CBRE Hong Kong.

The office market can expect more relocations from traditional core areas in the near future as companies move to achieve rental savings and secure space in newer buildings in emerging decentralised markets, CBRE noted.

In fact, a total of 4.5m sq ft of new supply is set to be delivered in 2018/19 of which 89% or 4m sq ft will be located in non-core areas.

“In Greater Central, at least 178,000 sq. ft will be vacated by tenants planning to move to decentralised areas by the end of 2018,” CBRE forecasts.

Photo from Edwin Leong, CC BY-SA 2.0