Bank of America set to sign lease at Cheung Kong Center

Deal will involve 150,000 sq ft of office space, as competition among Central landlords increases

PUBLISHED : Saturday, 08 December, 2012, 12:00am
UPDATED : Saturday, 08 December, 2012, 3:46am

Bank of America is close to agreeing to lease almost 150,000 square feet of prime office space in Cheung Kong Center, as competition among landlords in Central increases with rising vacancy rates.

Under the plan, the bank will occupy seven floors in the Center, according to two people familiar with the transaction.

The current lease of the bank's Merrill Lynch unit in Citibank Plaza is said to expire in September.

Prime office vacancy rates in Central rose to 4.9 per cent at the end of November from 3.6 per cent a year earlier, according to broker Jones Lang LaSalle.

PricewaterhouseCoopers last year moved its operations at the Center to other offices, while Deutsche Bank in 2010 completed its relocation to the International Commerce Centre in West Kowloon.

"Even with rising vacancies in Central, there aren't that many choices for tenants looking for such a big space in one building," said Simon Lo, the director of research and advisory at property broker Colliers International.

"We're also seeing signs that the drop in vacancies is stabilising."

The deal is the biggest by space in Central since at least 2003 when UBS signed a 10-year lease with the International Finance Centre II, according to figures from CBRE Group, the world's biggest commercial realtor by value.

Prime office rents in Central have fallen more than 10 per cent in the first 11 months of the year as banks cut staff and relocate to cheaper districts in the city, according to Jones Lang LaSalle.

The average rent in Cheung Kong Center is about HK$105 to HK$110 per square foot a month, compared with HK$100 in Central, according to Collier's Lo. Tenants include Goldman Sachs and Barclays.

The Center's owner Li Ka-shing, Asia's richest man, has a net worth of US$27.9 billion, according to the Bloomberg Billionaire Index.

Tiffany Chen, a spokeswoman for Bank of America's Merrill Lynch unit in Hong Kong, declined to comment on the bank's relocation plan, as did Laura Cheung, a spokeswoman for Hutchison Whampoa.

Amy Wong, a spokeswoman for Champion Real Estate Investment Trust, which owns Citibank Plaza, also declined to comment.

Central is the world's most expensive district to lease office space, according to a CBRE report in July.