Landlords of Hong Kong’s ‘Ginza-style’ commercial buildings slash rents and target non-restaurant tenants amid coronavirus downturn

Buildings housing restaurants, bars and shops on higher floors are struggling to retain tenants as previously unaffordable street-level rents tumble

Landlords are cutting rents to compete, and targeting a broader range of tenants, such as medical clinics and beauty salons

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The ‘Ginza’ buildings sprouted across Hong Kong, especially in tourist districts like Causeway Bay (pictured) and Tsim Sha Tsui, during a boom in tourism to satisfy demand in a city famous for its shortage of space. Photo: Sam Tsang

Published: 8:00am, 2 Sep 2020Updated: 8:28am, 2 Sep 2020

Landlords of Hong Kong’s “Ginza-style” commercial buildings are slashing rents by up to 40 per cent and shifting their focus away from restaurants and bars to survive the dramatic downturn in the catering and retail sectors caused by the coronavirus pandemic.

As rents of street-level shops and restaurants have tumbled, these projects – buildings typically packed with cafes, bars and small shops on higher floors – are struggling to retain tenants.

With no sign of a rebound in the food and beverage industry, some of them are now targeting a new tenant mix including such businesses as beauty parlours and medical clinics.

“If you enlist tenants without transforming, the [rent] offers will be very low because there are too many choices,” said James Luk, sales director at Midland IC&I. “Street shops have had their rents slashed, and social distancing rules have hit the catering industry very seriously. So the vacancy rates [in the Ginza buildings] are high.”

Named after one of Tokyo’s busiest shopping districts, the term Ginza is used by real-estate agents to refer to commercial properties shared by many different businesses under the same roof. The term was coined when sky-high rents for street-level shops forced stores in the city to move upwards, where space was more affordable.

Such commercial buildings are usually in relatively small single blocks. They sprouted across Hong Kong, especially in tourist districts like Causeway Bay and Tsim Sha Tsui, during a boom in tourism to satisfy demand in a city famous for its shortage of space.

Their landlords, particularly those in Causeway Bay, traditionally preferred to lease to restaurants as they could boost footfall and afford higher rents.