Hong Kong retailers filling up empty shops, sending vacancy rates in tourist areas to 3-year low as landlords cut rents
Mannings grabbed lease in Tsim Sha Tsui for 72 per cent less than the former tenant paid after space gathered dust for 20 months
Hong Kong is missing something lately: empty retail shops.
Retail sales are up. So is tourism. And landlords are settling for lower rents for street-level shops – at least one was dropped by more than 70 per cent.
The combination has sent vacancy rates of street-level shops down to 5.6 per cent – a three-year low – in four popular tourist areas, said Tony Lo, a director at Midland IC &I. The areas are Causeway Bay, Tsim Sha Tsui, Central and Mong Kok. Of 7,288 street-level shops there, only 408 were recorded as empty.
“Even those landlords with strong holding power are now willing to cut rents after leaving their spaces empty for a year or two,” Lo said. “They bought their retail properties more than a decade ago and have already paid off their mortgages. They are the last ones to offer rent reductions.”
One of the most notable examples is Mannings, the local health and beauty chain. In May, it leased a 2,516-square-foot shop on Canton Road in Tsim Sha Tsui for HK$1.25 million (US$160,000) a month. That is 72 per cent cheaper than the rent paid by the former tenant, Chow Tai Fook Jewellery. When the jewellery seller moved out, the space was empty for 20 months.