Pioneer Global markets Kwun Tong offices from first industrial conversion
Firm leases offices in Kwun Tong after spending HK$240m converting building
Hong Kong-listed Pioneer Global has begun leasing for a commercial building that marks its first industrial property conversion, in a bid to tap the market before an expected increase in office supply in Kwun Tong in the coming years.
"There will be a lot of supply in Kwun Tong. Even though some of the offices will be owner-occupied, the new supply could still add to pressure on rents," said Edward Law, head of asset management at Pioneer Global. "We are lucky in terms of timing."
According to property consultants, more than two million sq ft of office space will be added in Kwun Tong between 2015 and 2018.
Pioneer Global is putting on the leasing market its 10-storey Pioneer Place, at 33 Hoi Yuen Road. It is the firm's first revitalisation scheme, converting the building from industrial use.
The company spent HK$240 million on the conversion, which now provides a total gross floor area of 230,000 sq ft. It completed the building works in August.
Law said the company had leased 50,000 sq ft at between HK$23 and HK$25 per square foot, a steep step up from the average rent of HK$7 per square foot before the conversion.
"Potential clients are in talks to lease a total of 100,000 sq ft," he said.
Pioneer is controlled by the Gaw family, whose members include Goodwin Gaw and Kenneth Gaw, the founders of real estate fund Gaw Capital.
Pioneer Place is the biggest building revitalisation project in Kwun Tong this year, according to JLL, the sole agent and marketing consultant of the property.
Other industrial refurbishment projects in the district include The Rays, with a gross area of 111,450 sq ft.
The government introduced an industrial revitalisation policy in April 2010. Rejuvenation of older industrial stock has been encouraged with the aim of providing space for an evolving economy. In addition to office conversions, the policy also envisages hotel and retail opportunities, CBRE said in a report last year.
Under the policy, owners can update and change the use of existing buildings without paying the land premium, subject to restrictions relating to the size and structure of a building.