Landlords are cranking up rents in Central amid a severe shortage of top quality office space, with mainland institutions among the very few able to afford first-class floor space, commercial property analysts say. When a mainland securities firm signed a deal to lease two floors of IFC2 - and did so swiftly and efficiently with scant objection to 'astronomical' rents - it said much about the way the office market was heading. Simon Smith, senior director of research and consultancy for Savills Hong Kong, says large banking and insurance companies have been forced to split their operations between Central and newer grade-A office districts that have sprung up in Kowloon, and east along the island to North Point and Quarry Bay. Some serviced office providers, such as the Executive Centre, are positioned to meet this move towards more economical floor space without sacrificing quality. One of the Executive Centre's six locations in Hong Kong is at Cambridge House in Taikoo Place, an area dominated by Swire Properties. The latest high-grade office to take shape along King's Road is the Kerry Centre. Like Swire's iconic One Island East nearby, it is strategically located to accommodate multinational companies migrating from Central - now Asia's most expensive office district, Savills says. The latest report by the international property advisory firm observes that districts such as Quarry Bay and Kwun Tong - or Kowloon East to the brand conscious - are among the locations companies, particularly non-financial firms, can look to as an alternative to unrelenting rent rises in Central. Other areas of redevelopment in the pipeline include the West Wing government offices, Kai Tak and waterfront reclamation along Central and Wan Chai. 'There is a cost-push factor that drives people into this area,' Smith says. 'Island East and Kerry Centre are the kinds of quality building that meets international specifications.'
