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Hong Kong’s office market is hollowing out as vacancy rate hits 10-year high. Who can save the landlords?
- About 1.1 million square feet of office space had been vacated by the end of May, the equivalent of the whole HSBC Tower
- Expedia, Macquarie, the Securities and Futures Commission are among tenants moving out of prime offices this year
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Hong Kong’s office landlords are facing the biggest crunch in a decade as rents slide and vacancy rate surges in the city’s notoriously pricey market.
About 1.1 million square feet (102,193 square metres) of space in Central business district would have been vacated by businesses by the end of last month, CBRE estimates. Imagine a totally empty HSBC headquarters, or two blocks of One IFC Tower. At 8.5 per cent, the vacancy rate is the highest since December 2009.
From Expedia to Macquarie Bank and the creator of the League of Legends mobile game, companies have trimmed their office demand as Hong Kong lurches from one political crisis to another, along with the impact of widening US-China trade differences.
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“Some landlords have finally accepted the fact the sweet old days are over,” said James Mak, district sales director at Midland Commercial. “They are now willing to cut prices.”
While the sector is fast becoming a tenants’ market, more companies are still expected to bail on their leases, according to market data provider Savvi. On top of the vacancy in Central, they have surrendered 900,000 square feet across the city in the first five months of this year, triple the volume in all of 2019.
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