Office rentals continue to fall
Grade-A office rental rates in Central dropped 7.9 per cent in the first quarter due to a decrease in take-up, according to DTZ Debenham Tie Leung.
Research director Alva To said he expected the office leasing market to continue to be slow in the second quarter.
He said average office rental rates would gradually pick up later in the year alongside the economic recovery in the United States, but grade-A office rent in Central will still decline 10 per cent to 15 per cent for the year.
Mr To said net effective rent experienced a significant fall in the past year. Office rents in Central slumped an accumulated 33 per cent to HK$35 per square foot in the first quarter, compared with HK$52 per square foot a year earlier.
Wan Chai, Causeway Bay and Tsim Sha Tsui saw an intensified downward trend as rentals fell 8.7 per cent and 10 per cent respectively in the first quarter, he said.
Island East recorded a 5.3 per cent decrease between January and March, against a 10 per cent fall in the fourth quarter last year, Mr To said.
He said some landlords started offering lower rentals to lure tenants in the first quarter, resulting in tenants moving from core to fringe Central.
He said there was a negative take-up of 158,000 square feet of office space in all business districts on Hong Kong Island during the quarter.
The overall vacancy rate of grade-A offices on Hong Kong Island climbed to 7.5 per cent in the first quarter, from 7.2 per cent in the fourth quarter of last year.
The vacancy rate in Central was 8 per cent, down slightly from the preceding quarter's 8.3 per cent. The rate in Wan Chai and Causeway Bay edged up from 6.3 per cent to 7.1 per cent.