Office leasing demand still slow despite stabilising environment

Rents across all major submarkets slipped 3% MoM.

Office leasing demand in Hong Kong remains muted even if the COVID-19 outbreak had been stabilising by end-April, with new lettings shrinking 14% MoM, according to the latest JLL Property Market Monitor report.

Rents across all major office submarkets dropped 3% MoM, with Central being hit the hardest as tenants either downsized or relocated to lower-cost options in decentralised locations. Rental contraction in the Central area was the sharpest amongst major submarkets with a 4.5% MoM drop.

Central’s Grade A vacancy rate rose to 4.6% in April, the highest since January 2014. Office rents will likely face further pressure for the rest of the year, said JLL Greater China head of research Nelson Wong.

“Global economic concerns will continue to encourage decentralisation through the year. Businesses carrying surplus space are trying to realise potential cost savings by downsizing or disposing of extra office spaces,” said JLL Hong Kong head of markets Alex Barnes.

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