KPMG is to relocate part of its offices to Causeway Bay, joining a growing number of companies choosing to be less Central and more cost-conscious.
Other big-ticket names to have fled Central recently as rents rose fast are Ernst & Young, PricewaterhouseCoopers, Sun Hung Kai Financial and Deutsche Bank.
Hysan Development yesterday announced KPMG had become the first office tenant at its newly developed Hysan Place on Hennessy Road.
The international accounting firm signed a nine-year lease for the building's 20th to 25th floors, renting a total floor area of 80,000 square feet.
KPMG has 100,000 square feet of office space in Prince's Building and 23,000 square feet of space in Alexandra House, Central.
Paul Brough, senior partner at KPMG Hong Kong, said: 'We are retaining all our offices in Prince's Building, but will release Alexandra House after we take up Hysan Place.'
Neither the company nor the developer would disclose the rent KPMG will be paying for its new office.
Property agents said the asking rate at Alexandra House was about HK$120 per square foot while Hysan Place was asking about HK$60 per square foot.
Brough said: 'The major reason [for relocation] is for our expansion to support our growth. There is little available space in Central, and Causeway Bay provides a very good location and environment.'
The firm will expand and relocate a substantial part of its professional practice groups to Hysan Place when the building opens in the second quarter of next year.
According to property agency CB Richard Ellis, the current vacancy rate in Central is less than 5 per cent. 'The office supply in Central is tight,' said Alan Lok, the firm's executive director of office services.
'There is a lack of new supply. Though a number of firms plan to relocate to other districts, they won't vacate their offices until next year. It is impossible for a company to find space in Central if it is looking for 50,000square feet to 100,000square feet.'
Last year, Hong Kong had the world's highest office rents, with grade A office space costing US$191.97 per square foot per year.
Simon Lo, executive director of research and advisory at Colliers International in Asia, said the average office rent in Central had risen 13 per cent to HK$121 per square foot in the first five months of the year.
'It has risen to a level difficult for professional services firms to be able to afford, unlike financial institutions. But these firms have strong demand for expansion, which is what is driving them to relocate outside Central,' he said.
'There was about 100,000 square feet of office space rented in Central in the first quarter, 74 per cent less than in the last quarter of 2010. That shows more and more tenants are finding the rents too high.'
Lo said he expected Central office rents to rise another 10 per cent in the second half of this year.