SFC strikes bargain for new offices

Competition for tenants in Central remains intense after the Securities and Futures Commission (SFC) secured a 10-year deal with Hongkong Land to lease four office floors in Chater House at an apparent bargain price.

Neither party has released details of lease terms but analysts believed the net effective monthly rent for the space would be less than HK$20 per square foot.

Chater House is facing competition from other landlords struggling amid weak economic conditions, especially from rival tower Two International Finance Centre (Two IFC).

Nomura Group recently clinched a deal to lease three floors at Two IFC at a surprisingly low rent of about HK$20 per square foot.

This underlined the competition for tenants and raised fears of further rental declines.

With the SFC tenancy agreement in place, Hongkong Land said the office space at Chater House was 70 per cent let and the retail section fully leased.

Hong Kong's securities watchdog will take up 73,500 sq ft on floors six to nine of Chater House, which was completed last year.

It said that it would achieve significant rental savings from the new lease starting on July 1.

Since 1992 the SFC has had its headquarters in Hongkong Land's Landmark complex, where it occupies six floors of Edinburgh Tower, totalling 72,500 sq ft.

It is paying about HK$20 million a year in rent for the Edinburgh Tower space, meaning an average of HK$22.9 per square foot.

'The new offices can be conveniently accessed by market practitioners and will enable us to continue to effectively discharge our responsibilities,' the SFC said.

'When we plan the office layout, we will do our best to economise the use of space. We will adopt modest fitting-out standards and otherwise make every effort to minimise the removal cost.'

The commission was told to leave Edinburgh Tower before the end of June because the lower portion of the building was to be turned into a 118-room hotel.

Brokers were worried the relocation would incur costs for the SFC, but the commission said it considered the rental package attractive.

GOOD DEAL

The SFC will move to Chater House, with a 10-year lease to start on July 1

The commission was told to leave Edinburgh Tower before the end of June because the lower portion of the building is to become a 118-room hotel

Landlord Hongkong Land says the SFC tenancy means the office space at Chater House is 70 per cent full and the retail section fully leased

The SFC has been in the Landmark since 1992