Developer Hip Shing Hong turns commercial blocks into small offices
Developer Hip Shing Hong refurbishes commercial blocks to cater for entrepreneurs
Midsize developer Hip Shing Hong has invested more than HK$110 million to turn four commercial buildings into small furnished offices to maximise rental income.
Under the brand "Office Plus", the privately run developer will offer about 250 offices for lease by the end of this year for small companies, at monthly rents ranging from HK$9,000 to HK$55,000.
"These properties are designed for small and medium-sized enterprises and new entrepreneurs who have small teams who may be short of capital and in a hurry to open a new office," said company managing director David Fong Man-hung.
"It may take a least a month and-a-half from finding an agent, renovating a property and moving in. But renting one of our premises may take only one day."
Fong said Hip Shing Hong planned to turn about 80 per cent of the floor areas in four wholly-owned commercial buildings into offices, sized from two-man workstations to 18-person offices. The offices will offer a total floor area of about 165,000 sq ft.
The monthly rent for an office in newly renovated New Victory House in Sheung Wan ranged from HK$35 to HK$37 per sq ft on average, he said, compared with rents of between HK$20 and HK$23 per sq ft in the same neighbourhood.
But the rent includes electricity, rates and management fees. Hip Shing Hong also offers a flexible lease term ranging from six months to two years. Fong said about 90 per cent of the available offices had already been leased.
Hip Shing Hong spent nearly HK$700 per sq ft in renovating and refurbishing the offices in Sheung Wan, at the CRE Building in Wan Chai, and the Go Up Building and Hip Shing Hong Mongkok Plaza in Mong Kok. Fong said the yield on the investment was 4 to 5 per cent and the company would seek to convert more properties into offices until it had a portfolio of 370 offices by 2015.
The buildings also offer meeting rooms, which can accommodate between eight and 30 people at rents ranging from at least HK$1,000 for four hours.
Daniel Wong Hon-shing, chief executive of real estate agency Midland IC&I, said the number of small offices had increased this year as many companies had moved to areas such as Kowloon East and Quarry Bay to cut costs.
Wong said with some companies moving out of expensive prime office locations in Central, commercial spaces in neighbouring areas were under pressure. "This has caused more owners to turn large spaces into smaller ones so that they can find tenants easier," he said.
"As internet shopping is becoming more prevalent, we are also seeing an increasing number of start-up companies with one to two staff. They need small offices to run their business."
However, he believed furnished small offices would not become a trend because of the renovation costs involved, as well as the frequent need to renew short-term lease contracts.