Rent has slid back to 1993, say agents
Effective rents for new office space in some of Swire Properties' office portfolio in Quarry Bay have slid to 1993 levels or just under $20 per square foot a month, according to agents.
Asking rents for buildings such as Dorset House, Devon House, Oxford House and Lincoln House had been set at $22 to $25 per square foot on the lettable area, they said.
However, after generous rent-free periods of anywhere from 10 to 12 months for five to six-year leases, rents had dropped to just under $20 per sq ft.
A tenant moving into Devon House last week signed a six-year lease and paid in 'the high teens' after a long rent-free period was included, agents said.
Computer firm Sybase recently agreed to similar rent for space in Lincoln House.
Space in the DCH Commercial Centre was leasing in the low teens after rent-free periods were accounted for, they said.
Agents said rents in the area would continue to fall in the next year due to oversupply.
Agents said there was only one tenant in the 340,000 sq ft Lincoln House, with the 500,000 sq ft Oxford House just being released on to the market.
A spokesman for Swire said the company was in active negotiations with a number of companies for Lincoln House, adding that Oxford House was not being actively marketed and the firm would wait until the building was near completion next year.
Ryan Jones, director with Vigers, said more adjustment were in store for office rents.
'Face rents have come down significantly and although future drops are expected, we anticipate that landlords would prefer to keep face rents as high as possible, with the major tenant incentives coming by way of rent-free and licence periods,' he said.
According to property agents, some large space users will be able to negotiate more than 12 months rent free.