More companies, including law firms, moving out of Hong Kong’s CBD — but not just to escape high rents
With rents continuing to edge higher and vacancy rates for Grade A offices in Central getting tighter, many companies, including law firms, have been seeking office space out of the Central Business District.
“Law firms are increasingly looking at their costs and workplace strategy. Tight vacancy and high rents in Central will only encourage further moves to nearby districts like Quarry Bay where a cluster of their client base is located,” said Alex Barnes, head of Hong Kong markets at JLL.
One example is international law firm Berwin Leighton Paisner (BLP) which announced earlier this month it would relocate its Hong Kong office from Central district to Taikoo Place in Quarry Bay, with the move to take place in October 2016.
BLP said it signed a six year lease with Swire Properties for 15,000 sq ft of space in Dorset House. The space will accommodate approximately 100 people to allow for further growth of the team.
BLP’s planned move to Taikoo Place from the Agricultural Bank of China Building marks the first international law firm to open an office in Quarry Bay.
Legal firm Ince & Co has also committed to move from Citibank Plaza in Central to One Island East in Quarry Bay.
“Increasingly, companies are looking at commercial districts where businesses can accommodate growth, new workplace change, and lower occupancy costs,” said Barnes.
Rents in all submarkets on Hong Kong Island continued to trend higher, albeit marginally, against a tight vacancy environment. Average grade A office rents in Central climbed 0.5 per cent month on month to HK$105.6 per square foot in April, according to JLL. The vacancy rate of Grade A offices in Central stood at just 1.4 per cent at the end of last month.
However, Ryan Jones, executive director, advisory & transaction services office for CBRE Hong Kong , said it would not be a trend for law firms to move outside Central.
The two law firms that decided on pioneering moves from Central to Hong Kong East this year did so because they will both adopt largely open-plan layouts in their new premises, said Jones.
It highlighted the growing trend for alternative workplace solutions as well as occupiers becoming more cost conscious, he said.
Meanwhile, it also depends on the nature of law firms’ businesses.
Law firms that have considered decentralised options for leases expiring in coming years are not focused on the corporate finance business.
Ince & Co, for example, is a specialist in shipping and aircraft finance in China.
“Clients do not come to their offices. They go to their clients’ offices,” Jones said.
In the next three months alone, about 860,000 square feet of floor space – representing 0.9 per cent of total stock in Hong Kong – is set to be vacated upon lease expiry, with Kowloon East to provide the most opportunities, according to JLL.