JAPANESE department store group Yaohan Hong Kong is likely to surrender half of the space it occupies at Sun Hung Kai Properties' New Town Plaza in Sha Tin because of a wide gap in lease renewal rates. A Sun Hung Kai spokesman said yesterday the possibility of the two sides reaching an agreement for Yaohan to renew its tenancy on all four levels was low in spite of negotiations over the past year. Sun Hung Kai said Yaohan was expected to renew its lease of 90,000 sq ft on levels one and two at less than $100 a square foot - which was below market rates. However, the developer said negotiations had reached a standstill for the remaining 94,000 sq ft on levels three and four after Yaohan asked for a new rate that was a ''fraction of current market rates''. The spokesman said although there was a long list of prospective tenants interested in space on levels one and two, at prices of more than $100 a square foot, Sun Hung Kai believed it was important to keep one of its major tenants. A spokesman for Yaohan said the company planned to make an announcement by the end of the month.
