The terrorist attacks in the United States are putting a dampener on grade-A office leasing in Hong Kong, with rents facing further drops. Agents and analysts said US companies would defer decision-making in leasing or shelve expansion plans, while other tenants sought additional discounts. Harriman Leasing director and general manager Doreen Lee said the terrorist attacks had affected US companies' decisions in office leasing. She said a well-known US company which had an office in New York's World Trade Centre had intended to lease 8,000 square feet at The Gateway in Tsim Sha Tsui, but negotiations had been suspended. However, she believed the impact would prevail only in the short-term. She said Wharf received an offer from a non-US company for 10,000 sq ft in Tower Six of The Gateway after the US tragedy. The Gateway's Tower Six was 54 per cent leased, she said. Towers Three and Five were 92 per cent leased, with the latest major tenant being US retailer Sears, Roebuck & Co, which takes up 40,000 sq ft. Other new tenants include Keyence HK and Zuji. Ms Lee said Wharf would not offer new incentives to lure tenants following the attacks, but security measures were stepped up for Harbour City in Tsim Sha Tsui and Times Square in Causeway Bay as many US firms were tenants. She said Wharf's strategy was to remain firm in rentals at new buildings and to keep a high occupancy for its older buildings, such as Harbour City offices, where rents were lower at HK$16 to HK$21 per sq ft. Leasing activity at Harbour City offices was active recently, probably due to companies being more cost-sensitive, she said. Agents said potential tenants were adopting a wait-and-see attitude as the impact of the attacks was assessed. A spokesman for Colliers Jardine said: 'Some deals under negotiation are pending as [tenants are] psychologically affected [by the US attack].' He said potential tenants were waiting until the political and economic situation became clear. Ryan Jones, the office leasing director at Vigers, said most companies which had planned to lease offices would defer their decision-making because the US impact could be severe on the local property market. He said the market could worsen if the US Government went to war. However, it could improve when the US economy eased. Mr Jones said office rentals had dropped 10 to 15 per cent from the beginning of this year. 'We predict a further decline of about 10 per cent based on the economic situation and abundant grade-A office supply next year,' he said. DBS Securities property analyst Winnie Chiu said demand for prime office space would further soften as US corporations shelved expansion plans. She expected office rents to drop a further 10 per cent and prices 15 per cent. The vacancy rate in Central would rise to 7.3 per cent by the end of this year and 8.2 per cent next year. The Colliers Jardine spokesman said some landlords were keen on leasing office space, especially non-core premises. Preferential terms such as extension of rent-free periods and allowances for interior design and furnishings were given. Jones Lang LaSalle international director Fung Kin-keung said most potential tenants were looking for a further reduction in grade A office rentals after the US attack. However, he had not found any commitment recently.