Mainland Chinese companies most active group in Hong Kong’s flagging office rental market, Knight Frank report says

The vacancy rate in grade A office buildings rose to a record 12.2 per cent in the first three months of the year, according to a Knight Frank report on Monday

The premium office space market continued to face ‘weak demand amid economic uncertainty,’ says the property consultancy

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Grade A office rents in Hong Kong fell 2.7 per cent quarter on quarter, according to JLL. Photo: Xiaomei Chen

Published: 8:30am, 1 May 2024Updated: 6:45pm, 1 May 2024

Mainland Chinese companies were more active than any other group in Hong Kong’s office leasing market in March, favouring space in the city’s newest prime office towers, analysts said.

However, their appetite for premium space was not enough to stem a steady increase in the vacancy rate as more office premises came online and overall demand shrank.

The vacancy rate in the city’s grade A office buildings rose to a record 12.2 per cent in the first three months of the year, a 0.7 percentage point increase from the previous quarter, according to a Knight Frank report on Monday.

“The Hong Kong Island grade A office market continued to face weak demand amid economic uncertainty,” the report said.

Vacancy estimates vary considerably from agency to agency. Colliers, for example, said the vacancy rate in Hong Kong’s prime office space hit a record of 15.1 per cent towards the end of August of last year.

New buildings have made more office space available in the city. For example, Six Pacific Place, with 218,000 sq ft of gross floor area in Wan Chai, and the 27-storey Viva Place covering about 300,000 sq ft in Wong Chuk Hang came on the market between January and March, according to JLL.