Swire Properties tops out latest office tower in Hong Kong’s new ‘eastern CBD’
Multinationals are moving out of Central Hong Kong in their droves in search of twice the spec, at half the cost
Swire Properties, the real estate giant, has topped out its latest office tower in Quarry Bay with over half the units pre-leased already to multinational corporations – very much in line with the growing trend of more foreign firms moving out of the city’s Central district.
One Taikoo Place is the first of two triple Grade A office towers in a HK$15 billion (US$1.54 billion) redevelopment project by Swire Properties, Hong Kong’s fifth-largest developer by market capitalisation.
Set to open in the third quarter of the year, it will cover half the towers’ combined total of two million square feet and cement the island’s eastern neighbourhood as a second, cheaper central business district (CBD) alternative to Central – traditionally the heartbeat of Hong Kong business.
“We saw a demand from Central-based tenants who wanted high spec accommodation, but at a lower price,” said Don Taylor, director offices, at Swire Properties.
“The value proposition we are presenting is twice the spec, at half the cost. As the rent differentiation between Central and Taikoo Place widens, it becomes a compelling financial argument to relocate out of Central.”
Rents range from HK$50 to HK$70 per square foot, depending on size of occupation and floor level.
“But corporate occupiers aren’t going to move just based on cost,” he said.
“A big issue that concerns them is the attraction and retention of talent. They want to be in a place with amenities that are commensurate with Central.”
Three old industrial buildings, also owned by Swire Properties, were demolished to make way for two new towers with a smaller footprint, creating 70,000 square foot of open space.
Other amenities within the entire Taikoo site redevelopment include retailers and restaurants, a co-working space, a private members’ club and a theatre.
The redevelopment of Taikoo Place, which has been part of the Swire empire for 140 years, marks the property developer’s intention to redefine the city’s office landscape, said Guy Bradley, Swire Properties’ chief executive.
“The lines between work and private life are becoming increasingly blurred. Corporates want a vibrant place, not just during office hours,” said Taylor. “It is about providing those amenities and venues, that create a stickiness where people want to stay after work.”
The world’s second largest law firm by headcount Baker McKenzie, for instance, will relocate its entire offices from Central to occupy five floors, taking a total of 100,000 square foot space, in the 48-storey tower.
Having always been based in Central, chief operating officer Brian Henderson described the move as a new chapter that was drawn by lower rents and the provision of extra amenities.
Other occupying companies include Facebook, communications conglomerate Interpublic Group, and international law firm Simmons & Simmons.
“An increasing number of companies are placing greater importance on their employees and the user experience,” said Darren Nugent, executive director, advisory & transaction services at CBRE Hong Kong.
“Firms are investing more time and resources in selecting and creating work environments that focus on productivity and wellness. A good office space in a vibrant commercial district serves as a strong talent attraction and retention strategy.
“Quarry Bay continues to be a popular location on Hong Kong Island for companies looking to decentralise too,” said Nugent.
“With the completion of One Taikoo Place, I believe the district will cement its status as a second CBD on Hong Kong Island.”