Central office landlords in scramble for tenants
Competition for tenants is intensifying among landlords of new office developments in Central, with increasingly attractive and generous packages being put on offer, agents say.
With the market marred by slow take-up and falling rents, Cheung Kong (Holdings), Hutchison Whampoa and Sun Hung Kai Properties are said to be offering better deals to attract interest in their projects.
Property agents said asking rents for the lower floors of Cheung Kong's The Center in Jubilee Street were as low as $30 per square foot on gross, with a rent-free period of six months.
One new tenant was Ogilvy & Mather, which had committed to take up three floors in the building. Lease terms were not disclosed.
Cheung Kong declined to reveal anything about the lease response, or tenants secured for The Center.
Hutchison was tight-lipped about the terms it was offering for its Cheung Kong Center in Garden Road, as was Sun Hung Kai Properties about its South West Tower at the airport railway Hong Kong Station.
Asking rents at the Cheung Kong Center were said to be in the region of $50 per sq ft on lettable basis, while those at South West Tower were said to be $50-$55.
Agents said the actual rents could be lower, especially after taking into account other inducements such as rent-free periods.
A Hutchison spokesman said it was launching the first phase of about 390,000 sq ft of office space, or 18 floors, at the Cheung Kong Center for lease.
But the terms, including rents, were unavailable at this stage.
Agents said no deals had been set for the new project, while tenants were taking their time and bargaining for better terms.
Vigers Hong Kong director Raymond Kan Wai-man said competition was intense in Central, and office rents were under pressure to fall further, subject to the economic situation.
Landlords were aggressively trying to locate tenants, but response and take-up had been slow, he said, adding that companies were delaying their decisions as they had more options.
A G Wilkinson & Associates assistant director Michael McGuire said there could be a huge difference between headline rents and net effective rents, taking into account the inducements offered by landlords now.
Deal-clinching incentives were becoming more attractive, and landlords were being flexible in negotiations and offered inducements on a case-by-case basis.
