Credit Suisse looks to sublet ICC office space
Bank tries to find new tenants for part of office, as it cuts costs amid tough environment
Zurich-based Credit Suisse has been seeking to sublet part of its office in the tallest building in Hong Kong as financial institutions cut costs amid what has been a challenging operating environment since last year.
Property agents have revealed that the bank started looking for tenants a few months ago to occupy more than 60,000 square feet, or three floors of vacant office space at the International Commerce Centre (ICC) in West Kowloon.
Credit Suisse is looking for occupants for the extra space on the 87th floor or above, representing about a fifth of its ICC office area, said a property broker, who declined to be named.
The bank occupies 10 storeys, or 300,000 sq ft, of the tower.
Global banks, including Morgan Stanley and UBS, are trimming jobs in Asia as an economic slowdown reduces demand from companies for investment banking services, according to Bloomberg. Barclays, Britain's second-largest bank, plans to eliminate at least 15 per cent of its investment banking positions in the region.
Gary Fok Cho-ping, head of commercial at property consultancy firm Cushman & Wakefield, said it was common for some large companies to sublet their premises. But he said financial services companies were now becoming more cautious when looking for office space.
"They are now looking for reasonable offers more carefully," Fok said. "They now opt for smaller spaces with about 5,000 to 7,000 sq ft … instead of over 100,000 sq ft in 2008 when the market was rosy."
The consultancy firm said monthly rent for prime grade A offices in Central dropped by more than a quarter last year to HK$104.50 per square foot, while other grade A office space in Central fell about 16.8 per cent to HK$98.43 per square foot. Landlords are now also feeling the pinch of the debt crisis, the economic slowdown and ensuing consolidations in the banking and finance sector, it said.
It forecasts that rents for top grade A offices in Central will decrease by 12 per cent this year, while other grade A offices in Central will fall by 10 per cent. Office rents in other areas are expected to grow by 3 to 10 per cent this year due to strong demand.
The firm also said rents for top retail premises in Hong Kong would climb only up to 5 per cent this year, after surging more than 30 per cent last year.
"The drop in luxury and big-ticket purchases has impacted overall retail sales and we are seeing a pullback in the expansion of this sector in the market," said Michele Woo Wing-sze, Cushman & Wakefield's senior director of retail.