The first half saw a further weakening of the overall office market, with DTZ Debenham Tie Leung anticipating continued downwards pressure from existing vacancies and new stock. DTZ business space department director Andy Yuen said grade-A office rents declined throughout Hong Kong's business districts in the second quarter. Net office rents in core and fringe Central dropped 6 per cent to HK$33 per square foot during the quarter, close to the rental level in the fourth quarter of 1999. The accumulated fall was 13 per cent in the first half. Average rents in Wan Chai and Causeway Bay also fell 13 per cent during the half, to HK$20 per square foot. Rents in Hong Kong Island East fell 11 per cent to HK$17 per square foot, with similar rentals in Tsim Sha Tsui, for a 15 per cent fall. The grade-A office aggregate vacancy rate on Hong Kong Island rose to 7.7 per cent in the second quarter, due mainly to vacancies rising to 8.4 per cent in core and fringe Central, Mr Yuen said. Vacancies in Wan Chai-Causeway Bay and Island East were 7.1 per cent, whereas Tsim Sha Tsui's maintained a 10.2 per cent vacancy rate, he said. DTZ's business space department executive director David Watt said the overall office leasing market in the second quarter followed the first quarter's cautious trend. The pattern of corporations renewing or restructuring their existing leases was expected to continue in the near term, Mr Watt said. Some might tend to surrender the remaining lease term and begin a new lease at a lower rent with incentives such as a rent-free period. 'The completion of Chater House will likely lead the vacancy rate in Central up to double digits, reaching 10 per cent by the end of 2002,' Mr Watt said. 'Two International Finance Centre, scheduled to come on stream in 2003, will be attributable to a rise in vacancies which will be reaching 13 per cent to 15 per cent in the coming year.' On the rental trend, Mr Watt said he was expecting Central rents to fall 5 per cent to 10 per cent next year.