Hong Kong’s most expensive office The Center to lose first big tenant as Goldman Sachs set to move out
The investment bank is expected to move its back office from The Center to a cheaper location across town, as analysts expect the new owners of the building to raise rents
Hong Kong’s most expensive office building may be becoming too expensive for one of its top tenants.
Global investment bank Goldman Sachs is set to move out of The Center, a 73-storey tower in the city’s Central district that sold for a record HK$40.2 billion (US$5.15 billion) last year. The bank will head for a lower-cost location in the Causeway Bay area after its lease expires in December, according to several people familiar with the matter.
The bank, the first top tenant to leave the building after the sale, may be able to cut its rental bill by up to 29 per cent in the move to Hysan Development’s newly completed Lee Garden Three, according to industry analysts.
“Due to limited supply, there is room for The Center to raise rents. When the new owner comes in, they have to raise rents when they renew leases with tenants,” said Thomas Lam, a senior director with Knight Frank.
Goldman would not be the first to reduce its presence in the Central area, where office rents are soaring. Already the most expensive city in the world to rent an office, Hong Kong’s offices are being snapped up by cash-rich mainland Chinese firms who are willing to pay for a Central location.
Last year, French international bank BNP Paribas moved most of its back office staff to a cheaper location in Quarry Bay on the opposite end of Hong Kong Island. The bank will, however, maintain offices in IFC Two. Goldman will also retain its office in the Cheung Kong Center in Central.