Sea views, an open office, cheaper rents... what’s not to love about relocating from Central?
As rents in Central continue to rise, a growing number of businesses are opting for cheaper office space in outer areas
It’s only a 15 minute subway ride from Central, but you’d be forgiven for thinking Taikoo Place in Quarry Bay is on a whole different island from the way people talk.
Despite the perception that the newly developed area is well out of the city centre, a growing number of businesses are foregoing their pricey central business district locations where rents have increased by over 13 per cent this year for cheaper options.
Law firm Berwin Leighton Paisner (BLP) is among the companies leading the trend, after swapping its three offices spread across Wan Chai and Central for one 15,000 square foot office in Dorset House, Taikoo Place, in October, with room to grow their 60-strong team to 100 over the six-year lease.
The move made them the first international law firm to make the shift to the area which boasts Facebook, JP Morgan and BNP Paribas - and newly arrived international law firm Ince & Co - as tenants.
“We had to move, we desperately needed to integrate,” Bob Charlton, BLP’s head of Asia, told the Post from his new office which looks out to Victoria harbour on one side and towards the green slopes of Mt Parker on the other.
“While Central is the traditional home for a professional services firm, we thought we should be open minded about it.”
With the average rents in Central costing around HK$110 per square foot per month compared with Hong Kong East’s HK$47 to HK$48 per square foot, savings are a big factor.
“Costs are very important these days in an ever increasing cost environment. What was important to us was that we could effect savings that could then apply to better marketing, to better training, to better relationship management with our clients.”
The location isn’t the only change - the move has also seen BLP swapping traditional individual offices for an open plan space, which features automated desks that rise up to become standing desks at the push of a button, and a spacious shared area.
And while some partners were not so impressed about the idea of swapping their office for a desk in an open plan space, they have already noticed a big difference in collaboration within the teams.
Clients too, have been positive, and have “made the trek out from Central” for events at the offices - which he notes is not so far thanks to Hong Kong’s transport infrastructure.
“They think it is modern and innovative. They like their financial services advisors to represent innovation and being up to date.”
Charlton expects more law firms to migrate outward as the area continues to develop.
“I think at the moment this seems to be a very economic place to operate from,” he said. “It really wouldn’t surprise me at all if it becomes a bit of a hub for professional services.”
There are still two more towers planned for Swire’s Taikoo Place - One Taikoo Place and Two Taikoo Place - which are due to be completed in 2018 and 2021 respectively, and will each add another one million square feet of office space to the area.
Don Taylor, director of office at Swire Properties, said he had seen an increasing level of interest from international law firms looking to move.
“Judging by the interest shown to date and the number of firms that have visited BLP’s offices, we believe that this trend is likely to continue,” he saidin an email response to questions from the Post.
He said Central would continue to have high rents over the next few years, but companies were also weighing other factors.
“What millennials are looking for in their working environments is completely different from previous generations. They don’t necessarily want corner offices, they want variety, flexibility and interesting, convenient places where they can socialise during and after work with friends and colleagues.”
“The line between one’s work and private life is becoming increasingly blurred.”
He expects the future Central-Wan Chai bypass to help with travel time, and bring Central and the Airport Express “that much closer” to Taikoo Place.
Andrew Yates, head of tenant representation at commercial real estate firm Jones Lang LaSalle (JLL), said there had been a trend of decentralising taking place, mainly driven by companies looking for more cost-effective options as mainland Chinese corporates increased competition for CBD spaces.
He expected the migration outwards - particularly towards the east of Hong Kong island - to continue.
“Cost is a factor, but with innovation in IT, connectivity, I don’t think companies are so dictated to, especially the multinationals, by location,” he said. “Hong Kong is very much a regional hub and a global financial centre so you’re not necessarily just dealing in the local Hong Kong market.”
Regardless of what rents in Central do next year, other areas would likely adjust.
“There will always be a demand for Central. You just may see different types of occupiers,” Yates said, noting that larger space occupiers may move east while smaller occupiers would stay in the traditional hub.
“Hong Kong east will continue to be at a significant discount to Central in the next year and into the future, it will always be an attractive proposition for tenants.”