Rents ease as firms downsize offices in Kowloon
Colliers says office rents in Kowloon are expected to fall up to 8.8 per cent this year as companies seek to cut costs by leasing smaller spaces
Weakness in the global economy is driving some companies to downsize their offices and seek replacement tenants for their office space in Kowloon.
"We found that there are more companies trying to get out of their leases by assigning the lease to a new tenant in Tsim Sha Tsui, Kwun Tong and Kowloon Bay in recent months," said Fiona Ngan, general manager at property consultancy Colliers International. She said the office spaces ranged from 2,000 square feet to 20,000 sq ft.
One example is Zurich Insurance, which has been seeking a new tenant since early this year to take over its lease for more than 50,000 sq ft of office space over three floors at C-bons International Centre (formerly called Millennium City 7) in Kwun Tong.
The insurer leased the office in 2011 and the fixed portion of the lease will expire in July 2017. Zurich has already moved out of the space.
Ngan said more companies, particularly in shipping, toys and sourcing, are downsizing and looking for smaller office spaces.
Tam Yue-man, president of the Toy Manufacturers Association, said many toy companies were downsizing because they moved some departments, such as quality control and merchandising, to the mainland.
"They don't have engineering teams in Hong Kong any more. They would hire a senior engineer stationed on the mainland to lead an engineering team."