Cosco (Hong Kong) Group, an arm of China's largest conglomerate, will lease seven of the 15 floors of its headquarters in Sheung Wan, according to property agents. While Cosco will occupy the top floors of the 52-storey building, agents said they would lease out floors 39 to 45 inclusively, which amount to about 160,000 square feet of grade A office space. Rents have not been fixed, but it is believed Cosco could ask for between $45 to $48 per square foot on the gross, agents said. A little more than a year ago Cosco spent almost nearly $3 billion buying the 15 floors which included naming rights from New World Development, and the Land Development Corp, which jointly built the twin-towered building. Cosco bought 301,392 square feet of grade A office space. The Queen's Road project is part of an urban renewal project jointly undertaken by New World and Land Development Corp. The project comprises two office towers with a gross floor area of 1.21 million square feet. It also includes a 24,219 square feet open plaza. Many agents initially believed that Cosco might try to sell off the floors it was not using. A slow office sales market was the main reason for the company's decision to lease the space out, according to agents. Strata-title owners at 9 Queen's Road, Central, and Lippo Centre in Admiralty, are asking from $14,000 to $16,000 per square foot for their grade A space. Floor plates in these buildings are substantially smaller than the 20,000 square feet in Cosco Tower. According to K.K. Fung Kin-keung, commercial director with Jones Lang Wootton, some buyers might find the lump sum payment for a whole floor too expensive. 'We are talking to a lot of purchasers and they said the lump sum is pretty big,' he said. Mr Fung said buyers might be more forthcoming if the owner divided up the office floors for sale. He said Cosco could expect a return of about 6 per cent a year. Despite a large increase in office supply to be ready in the Central area in the next couple years, Jones Lang Wootton predicted that office rents would increase 6 or 7 per cent by the end of the year. With very low vacancy rates in Central, agents said that it was a tough proposition finding 10,000 square feet in the core business district. 'It is very difficult for anybody who is looking for more than 10,000 square feet,' said Mr Fung.
