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Hongkong Land will lease its new office development, 11 Chater Road, in Central on a 'shell and core' basis - probably the first time such an arrangement has been used for Hong Kong's grade-A office buildings.

With the project expected to be finished in the middle of next year, Central's biggest private landlord is talking to potential tenants.

The executive director of commercial property for Hong Kong, Raymond Chow, said tenants would not be provided with ceilings or raised floors for office units in the project.

However, the cost of installing these facilities would be reimbursed in cash by Hongkong Land.

The arrangement aimed to create maximum flexibility for tenants, especially financial institutes, the project's major target.

It is a system used in the company's Singapore commercial project. This concept received a good response, attracting big names such as Goldman Sachs and Credit Suisse First Boston.

The 'shell and core' rental policy would save time and money for tenants as they no longer needed to reinstall their favourite facilities.

Another flexible approach by the company has been provision for six or seven tenants to be able to install their own mechanical and engineering equipment, with roof space set aside.

While a potential anchor tenant was negotiating to take up more than 100,000 square feet of space, Hongkong Land did not intend to grant the naming right of the project, Mr Chow said.

However, he indicated that the building could provide some signage space for the major tenants.

The project, previously occupied by Swire House, is at the junction of Pedder Street, Des Voeux Road Central and Chater Road.

The new building offers a floor area of 579,000 sq ft. It has 23 floors for office use. High-zone offices from the 18th to 29th floors provide a typical floor plate of 19,540 sq ft net area, and low-zone offices from the fifth to 17th floors have a typical floor plate of 18,850 sq ft.

The three-level retail podium comprises a gross floor area of 81,000 sq ft, with a net area of 45,000 sq ft.

The original plan provided a higher development floor area of 650,000 sq ft by surrendering some of the ground-level pedestrian space. It has been changed to increase retail space and reduce the office area.

Mr Chow said the new design meant the project could be ready six months earlier and that the US$300 million cost was a reduction of US$100 million on the original design.

Adopting a more traditional rectangular-shape design meant the building could provide efficient, column-free floor plates.

Mr Chow admitted that the competition for 11 Chater Road would come from Two International Finance Centre - the joint-venture office project being built by Sun Hung Kai Properties and Henderson Land Development above Hong Kong Station.

However, he said it would be a good thing, with more financial institutions attracted to new buildings in Central, creating a critical mass.

On another front, Mr Chow said Hongkong Land also would assess the profitability of building on the Central Market site.

Expectations were that the Government would be releasing the lot for sale next March.



Hongkong Land lets tenants decide on ceiling and raised-floor needs to enhance flexibility