Concrete Analysis | Looking farther afield
Lack of space on Hong Kong Island, plus high prices, means Hung Hom has suddenly appeared on the radar as a key business area
In recent years, Hong Kong has been identified as the most expensive office market in the world due to high rents in Central. However, Central rents have fallen by over 16 per cent since the peak of the market in 2011 and vacancies have shot up during this time.
Currently, one-third of all available space in Hong Kong is to be found in Central, and a number of occupiers have taken advantage of vacancies in the best buildings to satisfy their requirements.
However, at a time when a growing number of companies have become more cost conscious, the lack of space in decentralised areas is acute. Unfortunately for occupiers seeking cost-efficient space, the situation is not improving.
A recent study by CBRE sheds some light on the lack of options facings occupiers. Of the entire grade A office stock in the Hong Kong market, the number of premises with vacant space of more than 25,000 square feet has fallen only recently to just 19 buildings. Almost all of these are located on Hong Kong Island, particularly in the most expensive areas.
For example, 10 of these buildings can be found in Central. Unsurprisingly then, but of concern to occupiers, is the fact there is only one grade A office building in the whole Hong Kong office market with more than 25,000 sq ft currently available to lease at an average price of less than HK$50 per sq ft per month.
The Kowloon side has seen vacancy rates whittled down steadily across its various submarkets. Vacancy rates in both Tsim Sha Tsui and Kowloon East, both key destinations for office occupiers, are currently below 2 per cent.