Gateway rentals facing pressure
Wharf (Holdings) could see rents for its Gateway II project fall even further, after already falling to about $21 to $22 per square foot on the gross, according to property agents.
Harriman Leasing, the leasing agent of Wharf (Holdings), recently signed up a German retail supplier, Karstadt, to a six-year lease at a net effective rent of $21 to $22 per square foot on the gross, property agents said.
Some agents claimed that as each of the three towers (3, 5 and 6) in Gateway II, which account for about 1.6 million square feet of grade A office space, get their Occupation Permits Wharf would come under more pressure to cut rents to fill the vacant space.
'When a company has their temporary occupation permits like they do now, they can negotiate more freely with a company,' one property agent said.
However, when the developer gets their permits, they have to start paying back some of the costs of the building, such as interest charges on borrowing, the agent said.
Wharf officials are confident that their rents will not slip much further. A Wharf spokesman said Gateway II (towers three and five) was 30 per cent leased.
Property agents said that a couple of companies were negotiating to lease another 100,000 square feet in towers three and five, which could bring the occupancy rate up to 40 per cent fairly soon.
The Wharf spokesman said that while rents had come off in Gateway II, tenants were prepared to pay the current rate.